Volume 2 Number 1

Winter 2010
powered by Loyalty 360

GLOBAL PERSPECTIVES & COALITION

Across the Ocean Blue

2010: The year

you invest in
Social Media
Making the Connection:
Employee Engagement and Customer
Loyalty

The Private Label Credit Card Dilemma

NEW YEAR, NEW WORLD

TRENDS & PREDICTIONS FOR THE YEAR AHEAD
 This Month in
WINTER 2010 VOLUME 2 NUMBER 1 WWW.LOYALTY360.ORG

DEPARTMENTS
6 What’s on Loyalty360.org
32 What drives the
success of American
8 Letter from the Editor and European loyalty
10 Contributors programs?
Across the Ocean Blue, pg.32
LOYALTY FORUM
12 Your Voice: Loyalty Management Readership
Survey
Amanda Chasteen, Loyalty 360
13 Q & A: Ask the Experts
What have you learned in 2009 that will shape
Building relationships, one person at a time. 2010? What should be on every marketers’ list of
“Loyalty & Engagement Resolutions”?
Carlson Marketing knows how to take care of your customers. FEATURES
We have unparalleled experience launching and managing relationship marketing programs. 16 Behind the Brand/People
20 Redefining Leadership
Our deep understanding of customer data translates into insight – and value – for you. Interview with Kim Marotta, Vice President of
Our full suite of services, creativity, strategy, execution, end-to-end operational excellence Corporate Social Responsibility, MillerCoors Llc Rick Blabolil, Marketing Innovators International, Inc.
and enthusiasm all combine to make us the perfect marketing partner. 24 Evolutionary Trends: Driving stronger relationships
18 Books
When you’re looking for direction on how you can turn customer engagement for improved business results in 2010
Loyalty Reads
into organizational value, contact us. Taylor Duersch & Catrina McAuliffe,
Carlson Marketing

16 As VP Corporate Social
Let our experience work for you. carlsonmarketing.com | 763.212.4520
Responsibility for MillerCoors,
Kim Marotta expands her
passion and commitment
to creating stronger
communities.
40 Keeping Up in a Down Economy
26 Approaching a New Decade with New Strategies:
Partnership Marketing
Brittany Simmer, Vesdia Corporation
28 Investing in Customers Ahead of the Recovery
David Rosen & Michael Greenberg, Loyalty Lab
32 Across the Ocean Blue
Alexander Meili, ICLP
35 10:10 Loyalty Trends for 2010
Robert Passikoff, Ph.D., Brand Keys, Inc.
38 The Confluence of Data, Dollars and Desires
Nicole Nunn Walker, MetroSplash Systems Group
Bob Nelson, Ph.D., Nelson Motivation, Inc.

28 Investing in Customers Ahead of

the Recovery—a whitepaper by
Loyalty Lab

4 July 2009 | Loyalty Management

Loyalty Management™ • WINTER 2010 3

Build true loyalty
by building
better relationships.
A more strategic, data driven approach can help
you move to the next level of loyalty. With genuine
insights into the needs and expectations of your
customers, you can talk with, treat, and reward
different customers in unique ways. This is what
we call true loyalty.
Bring this approach to life with comprehensive
services from Maritz. It's our business to understand
what matters most to people. Enable them with
knowledge and tools. And motivate them to
change behaviors.
To start working on your relationships, stop by
booth #100 at the Loyalty Expo.
Ready to learn more now? Visit maritz.com or
call (877) 4 MARITZ.
This Month in
WINTER 2010 VOLUME 2 NUMBER 1 WWW.LOYALTY360.ORG
TECHNOLOGY,
TRENDS & REWARDS
42 Rewards Trends 2010
“Variable Rate Rewards,” James C. Purdy, Bridge2
Solutions, Inc.
“Travel Loyalty Program Redemption Trends,”
John Miller, Connexions Loyalty Travel Solutions
50
“Distinguishing Loyalty,” Render Dahiya, Arroweye
Solutions
“Concierge,” Michael Breault, Circles
46 Expanding the Universe of International Coalition
2010: The Year You Invest in Social Media
Redemption Options
James Watts, First Annapolis Loyalty
Loyalty Management
Editorial & Production Team
48 Globiphonization
Dominic Hofer, Loylogic
Erin Raese - Editor in Chief
Mark Johnson - Contributing Editor
50 2010: The Year You Invest in Social Media
Jared Stivers, Walker+Stivers Analytics
Caitlin Schar - Editorial Director
Kathleen Ninneman - Graphic Designer 52 Mobile Applications Advertising and Marketing
Jet Litho Inc. - Print Production Amit Gupta, InMobi
Loyalty 360 Team
Mark Johnson - President & CEO BEST BUSINESS PRACTICES
Erin Raese - COO
54 Loyalty Innovation
Amanda Chasteen - Manager, Marketing Operations
Charlie Deye - Director of Sales 56 The Private Label Credit Card Dilemma
Julie Hellebusch - Controller Jeffrey Harris, SHC Direct
Contacts 58 Engagement and the ROI of Results Measurement
Article Submissions: Erin Raese (erinraese@loyalty360.org) Todd Hanson, Catalyst Performance Group, Inc.
Advertising: Charlie Deye (513.226.0925)
60 Three Components for a Successful Business Model
To subscribe to Loyalty Management, visit loyalty360.org.
Eric Granado, CSH Consulting
62 Ten Ideas To Build Morale In Any Organization
We Want Your Feedback
Billy Arcement, MEd, The Leadership Strategist
As a “voice of the customer” focused publication we
64 Trends, Implications and Solutions in Engagement
want to hear from you–our customers. What would
Marketing
you like to see included in these pages? Share your
Bob Fetter, Pluris Marketing
thoughts on articles and ideas for content.
66 Engaging Employees in the Road to Customer Loyalty
This is your platform. We would like to hear from you.
Barry Kirk & Melissa Van Dyke, Maritz
Write us at: mailbag@loyaltymangement.com
68 Pushing Loyalty: Connecting employee engagement
© 2010 Loyalty 360, Inc. and/or its Affiliates. All Rights Reserved.
Reproduction and distribution of this publication in any form without prior written permis-
to customer loyalty
sion is forbidden. The information contained herein has been obtained from sources be-
lieved to be reliable. Loyalty 360 disclaims all warranties as to the accuracy, completeness
Michael Konikoff, Fairlane Group
or adequacy of such information. The opinions shared are those of the contributing uthors
and not necessarily reflective of Loyalty 360 and/or its affiliates. Loyalty 360 shall have no 70 Extended Loyalty Program Profile
liability for errors, omissions or inadequacies in the information contained herein or for in-
terpretations thereof. The opinions expressed herein are subject to change without notice. Air Miles & My Planet
Loyalty Management™ • WINTER 2010 5
 LOYALTY 360 ON THE WEB

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you may have missed … OUR LOYALTY WEBINAR SERIES

Webinar recordings from the series are available for Loyalty 360 members to
access. Log on to loyalty360.org and visit the Multimedia section for a full listing.
Epsilon: Successful Loyalty Marketing: Developing New First Data: ReadyLift Loyalty
Member Marketing That Works, an Instructional Case Study
Maritz: Engaging Employees on the Road to Customer Loyalty
Kobie Marketing: iPhonifying Loyalty - Leveraging Today’s

knowledge. deliver y. results.

Mobile Technologies to Drive an Integrated Customer Loyalty Carlson Marketing Worldwide: A Brighter Future,
Experience a Better Way: Loyalty Marketing for Consumer Goods
Packaging

how motivating.
NEW MEMBER FEATURES Let us motivate you.
Member Messaging At Affinion Loyalty Group (ALG), we offer ways to drive profitable behaviors among your customers using any means possible:
points, miles, rewards, incentives, enhancements.
Loyalty 360 members can now direct message other Loyalty 360 members. Search and view Loyalty 360
member profiles and send messages with attachments directly, without an introduction. Browse by name, Our years of experience ensure we acknowledge, understand and anticipate marketplace and consumer trends, helping us
company or member level and organize messages in folders. design programs to motivate your customers’ behavior. Some of the most recognizable brands have employed our services
Have something to share with all Loyalty 360 members? Post or schedule a bulletin along with an to develop loyalty solutions to meet their profitability goals. We believe loyalty should be a business strategy with a positive
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Designated members can assign and manage company associate and/or client memberships. marketing services and how we can help create loyalty between you and your customers.

6 Loyalty Management™ • LOYALTY360.ORG

 FROM THE EDITOR

Welcome to our first anniversary issue!

This issue takes a look at what we’ve learned from 2009
and provides thoughts, insights and trends for 2010 and
beyond. With the challenges of the last few years now
behind us, it is truly amazing how we are embracing 2010
and beyond with optimism, enthusiasm and openness to
change.
Each of our contributors has shared their predictions and resolutions for the
new year. Not surprising, many of us are focused on technology. Technology
has grown fast in the past decade rapidly changing and influencing how
we communicate with each other and our customer. In this issue, we’ve
highlighted a number of new technologies in Loyalty Innovation on pgs 54-5;
social media (50-1), and mobile strategies (48-49, 52) which will no doubt be
embraced, tested and re-engineered in 2010.

Welcome new Loyalty It’s not just a new year, but a new world in loyalty. Here in the states, we’re
360 Members: seeing significant convergence of strategies and technologies from our
neighbors in Canada, Europe, and Asia. There is a lot to be learned from these
Alterian other cultures; the influences will surely affect the way we communicate
Boost Rewards with our customers and employees. In this issue we take a deeper look into
Citibank what the world community is doing to influence and impact loyalty strategies
edo Interactive around the globe. Compare our differences in Across the Ocean Blue (32-4).
Incentium See what is working for our neighbors up north in a special Loyalty Program
Marketing Innovators profile on pg 70.
Mocapay
Nielsen 2009 was a year of learning; from how to run an association to producing a
Sears publication to continually learning and understanding the dynamics of the
Young America CUSTOMER. As Mark and I continue to speak with you, we’re listening to
your requests for insights, ideas and support, plus we’re taking your inquiries
and actively developing insightful articles and building a diverse, educational
agenda for the 2010 Loyalty Expo, in Orlando Florida. Be sure to join us June
2010 2010 predictions
6 – 8 at the Omni ChampionsGate.
•Submit expense Sincerely,
reports within 48
hours of trips
•Practice the Power
Erin Raese
of Nice—Finish the
Editor-in-Chief
book and work on
Loyalty Management
being nice erinraese@loyaltymanagement.com

8 Loyalty Management™ • LOYALTY360.ORG

 CONTRIBUTORS
Billy Arcement
Billy Arcement—The Leadership Strategist—
is a professional speaker, leadership
consultant and author of two books. He
provides solutions for business and
education leaders by turning knowledge into
results. Learn more about his services at
SearchingForSuccess.com.
Richard A. Blabolil
Rick Blabolil is president of Marketing
Innovators International, Inc. Providing
thought leadership to the industry, Rick is
past president of the Incentive Marketing
Association and Forum for PPMM, and
vice president of the Incentive Research
Foundation.
Michael Breault
Michael Breault is CEO of Circles, a leading
provider of concierge, events and loyalty
marketing services to Fortune 1000 clients.
Circles has revolutionized how companies
build life-long relationships with their
customers and employees, driving behaviors
that increase engagement, satisfaction and
profitability.
Render Dahiya
President and CEO of Arroweye Solutions.
Render Dahiya has led Arroweye Solutions
since 2007. Previously, he spent nearly 20
years at FedEx Kinko’s as one of its founding
members, helping to build it into a nationally
recognized brand.
Taylor Duersch
VP—Decision Sciences—Carlson Marketing.
Taylor has more than 10 years of experience
leading customer analytics, and managing
and evaluating marketing solutions in the
B2B and B2C space.
Bob Fetter
Senior Vice President, Pluris Marketing.
With more than 20 years of experience in
sales, marketing and operations, Bob helps
leading marketing organizations implement
breakthrough ideas, and has helped design
more than 150 multi-channel marketing
programs for major business-to-consumer
and business-to-business companies.
10 Loyalty Management™ • LOYALTY360.ORG
CONTRIBUTORS
Eric Granado
Eric Granado is Director of Issuing &
Alternative Payments for CSH Consulting,
a recruiting firm focused on the payments
industry. The CSH Consulting leadership
team has over 50 years of combined
experience recruiting in the payments arena.
Michael Greenberg
Michael is Chief Operating Officer at Loyalty
Lab. Michael has worked in several roles
since joining the company in 2004, and
currently oversees daily operations. Before
joining Loyalty Lab, Michael was VP of
Marketing for Galyans.
Amit Gupta
Amit Gupta, Co-Founder and Head of
Business Development, InMobi. Amit
spearheads InMobi’s growth efforts by
focusing on strategic alliances as well as
managing publisher relationships.
Todd Hanson
Todd Hanson is president and founder of
Catalyst Performance Group, Inc. and leads
the ROI of Engagement Partnership. He
conducts ROI evaluations and trains in ROI
Methodology™
Jeffrey Harris
President and CEO, SHC Direct. Jeffrey
founded SHC Direct and leads its
management team. Jeffrey has over 20 years
of marketing, sales, sales management and
client services/operations experience in the
incentive and loyalty marketing fields.
Dominic Hofer
Dominic Hofer is the CEO and Co-Founder
of Loylogic, Inc. He is a seasoned loyalty
expert and helped building multiple award-
winning frequent flyer programs. He has a
Degree in Law from the University of Berne,
Switzerland.
Barry Kirk
As the Director of Strategic Consulting
for Maritz Loyalty Marketing, Barry Kirk
assists clients in identifying and refining
their customer engagement objectives, as
well as defining solutions to drive customer
retention and loyalty.
Michael Konikoff
Michael has spent over 26 years in marketing
with the last 16 spent within the loyalty
sector. As Senior Vice President, Business
Development- Fairlane Group, Michael heads
up strategy, including business modeling,
planning and consulting.
Catrina McAuliffe
Vice President, Brand Planning—Carlson
Marketing. Catrina has more than 20 years
of brand planning experience working
with clients to develop consumer centric,
strategic marketing plans and creative
communications including advertising, public
relations, digital, relationship marketing and
design.
Alexander Meili
European Planning Director, ICLP. Alexander
is responsible for the strategic account
planning of new and existing clients in
Europe. He is influential in furthering ICLP
European expansion and recently set up a
new office in Madrid.
John Miller
Director of New Business Development
for Connexions Loyalty Travel Solutions
(CLTS), John brings over 10 years of loyalty
travel experience and over 20 years of
travel industry experience including
positions within industry relations, product
development and sales.
Bob Nelson, Ph.D
Bob Nelson, Ph.D., is president of Nelson
Motivation Inc. (nelson-motivation.com) and
author of the new book Keeping Up in a Down
Economy: What the Best Companies Do to Get
Results in Tough Times.
Robert Passikoff, Ph.D
Robert is founder and president of
Brand Keys, Inc., a customer loyalty and
engagement research consultancy based
in New York City. He is the author of the
best-selling Predicting Market Success, and co-
author of The Certainty Principle.
If you would like to contribute to a future
issue of Loyalty Management please
contact Erin Raese at (630) 235.8251 or
erinraese@loyalty360.org.
James C. Purdy
Jim is a founder and executive vice
president of Business Development for
Bridge2 Solutions, Inc. His career spans
three decades in awards development and
strategy, managing sales teams and client
programs in various executive roles.
David Rosen
David is SVP, Strategy and Channel
Development at Loyalty Lab. Over the past
two years, David has designed innovative
loyalty programs for more than three dozen
top national brands in the multi-channel
retail, consumer goods and services, media
and travel industries.
Brittany Simmer
Brittany Simmer is the vice president of
business development for Vesdia’s leading
merchant-funded rewards network and
partnership marketing programs for retailers,
banks and the hospitality industry.
Jared Stivers
Jared Stivers is the founding partner of
Walker+Stivers Analytics Consulting a
boutique agency based in San Francisco
that focuses on quantifying social media for
marketers.
Melissa Van Dyke
Employee Engagement Practice Consultant
for Maritz, Melissa consults with clients on
how to build strategic recognition solutions
that engage, align and motivate employees
to higher levels of performance. Van Dyke’s
strategic approach allows companies to
harness the power of recognition that
resonates to drive business results.
Nicole Nunn Walker
Nicole has spent two decades in Marketing
Management roles with Fortune 500
companies including CA, Sterling Software,
AT&T, Amdocs and Texas Instruments.
Nicole currently serves as VP of Marketing
for MetroSplash System Group, providers of
the FuelLinks loyalty platform.
James Watts
James Watts is an Associate at First
Annapolis with a focus on the card issuing
practice area and has been a part of the
Strategic Loyalty Initiative since its inception.
Loyalty Management™ • WINTER 2010 11

LOYALTY FORUM: YOUR VOICE
Loyalty Management
Readership Survey
by Amanda Chasteen, Loyalty 360
Here’s what you’re saying about the Loyalty Management magazine:
•50% want to see more coverage on Engagement
•61% discovered new companies, products or services through the ads
•23% have reached out to our advertisers
•37% want to see less focus on restaurant loyalty
•88% want to read interviews with brand leaders
•12% share the magazine with your friends and family
•44% want to see more about technology
•41% want more information on financial loyalty programs
On average, how much do you read per issue?
26% Read Some
44% Read Most
9% Skim
21% Read All
12 Loyalty Management™ • LOYALTY360.ORG
Q&A
Q: What have you learned in 2009 that will shape 2010?
A:
What topics interest you most?
Eli Cohen, Polo Ralph Lauren
“Case studies with metrics pointing out
successful and non-successful programs.”
Harmen Donker, FunMiles Antilles NV
“Supporting teamwork within my own company as a
means of developing loyal clients.”
Jean Eric Tousignant, Laurentian Bank of Canada
Best practices in direct marketing
for engaging and on boarding
new customers, reactivating
lapsed customers, and retaining
best customers.
Heidi Brien, Sodexo
“Use of CRM techniques to develop loyalty programs.”
Ask the
Experts
What should be on every marketers’ list of “Loyalty
& Engagement Resolutions”?
What happens to consumer and employee loyalty
and engagement when an economy is in turmoil? How
do we define trends that are shifting month-to-month,
a society in reactionary mode, and plan for the future
of market satisfaction? 2009 has brought forth a set of
shifts which may immediately sting, but which carry
with them the promise of a more streamlined model
with the potential to benefit businesses and consum-
ers alike through its adaptability. Let’s consider two
trends which are of particular importance in looking
ahead to 2010.
2009 Business Trend:
Restructuring & refocusing
2010 Business Advantage:
As hard as the 2009 trend has been on individuals,
from an objective business perspective, consumers are
looking at more streamlined, focused providers who
realize the importance of serving their customers well.
Consumers will also find businesses who are thinking
outside traditional lines, creating partnerships and
hiring expert contractors to complete work instead
of carrying the overhead of maintaining burgeoning
departments. Narrowing focus also comes with a dis-
tinct advantage for loyalty and engagement programs:
the ability to more rapidly understand what is drawing
in consumers and keeping them coming back for more.
2009 Individual Trend:
Fracturing & rethinking; a surplus of highly skilled
people in the market for work
2010 Individual Advantage:
Entrepreneurship is on the rise and individuals are
gaining back a sense of empowerment regarding
their definition of work satisfaction and employ-
ment. Just as businesses are gaining focus, indi-
viduals who have been laid off are challenged to
hone in on their passions and springboard from
those into the next stage of their careers. For many,
this means talent actualization and a return to
looking at work as more than a job. What does this
mean for loyalty and engagement looking forward?
—Connie Chesner
Paradigm shifts are powerful and workers are re-
Founder and
Consumer Behavior Strategist,
defining what it means to be loyal in the workplace.
Many are no longer focused on finding a long term
Right Brain Discovery
fit, but instead on finding a project-based align-
ment of skills. For consumers, the trends in flex-
ibility and specialization will trickle into buying
habits and expectations, as people learn to rethink
their priorities and how they define careers, they
will rethink what they expect of companies, shat-
tering the definition of what it means to be loyal
and taking engagement to a new depths.
continued on next page »
Loyalty Management™ • WINTER 2010 13
 Loyalty Forum: Q & A (continued)
Today’s customers demand engagement
from those companies they do business with
throughout every stage of their relationship with
products and services that provide value
and a sense of control.
A:
This past year marked a complete para-
digm shift in the financial services industry. In the
aftermath of the financial collapse, lawmakers quickly ush-
ered in legislative and regulatory changes that are forcing
banks to reconsider their business models and envision new
ways of doing business. The CARD Act of 2009, for example,
changed the game for issuers. By limiting rate and fee in-
creases, and regulating marketing practices, the law makes
it more challenging for issuers to manage risk and maintain
profitability. In addition, new regulations on overdraft fees
that require consumers to opt-in threaten to further reduce
fee income. To compensate, many banks may pass costs along
to customers who will bear more direct expense for formerly
free or low-cost services like free checking accounts. In other
cases, customers may be denied services altogether. Further-
more, pending legislation related to interchange and a pro-
posed Consumer Financial Protection Agency could bring
more blows to the embattled banking system.
In addition to these legislative developments, changes in
consumer behavior that took shape in 2009 promise to be-
come further entrenched in the years to come. The era of free
spending came to a halt in late 2008, replaced by a new era of
accountability where consumers are reasserting control over
their finances. Fifty-nine percent of Americans say they will
resist spending at pre-recession levels; thirty-eight percent
are reducing their use of credit cards, while the savings rate is
projected to average 4% next year—the highest rate since 1998.
One major beneficiary of these changes is the debit card. As
consumers seek to entrench their newfound frugality, they’re
migrating to debit and prepaid products. In fact, Visa reported
that their debit volume surpassed credit for the first time ever
in late 2008. Even though debit and prepaid products are ex-
periencing growth, deciding how to maximize profits within
these product lines remains an area of uncertainty.
Q: Do you have a question for our panel of experts?
Write us at Mailbag@LoyaltyManagement.com
14 Loyalty Management™ • LOYALTY360.ORG
A: When it comes to social marketing, customer communities, and other sharing activities on the web, 2009 appears to
be the year that social networking solutions began to address real enterprise objectives for both B2B and B2C businesses. What we learned
is that top level marketing messages are being heard less, and the top buying influence has shifted to the voice of the customer. Keeping the
attention of consumers has gone from difficult to nearly impossible.
2010 opens up new realms of possibilities. Those businesses that invest in the online customer experience will be the winners of tomorrow.
You have already seen how prospects and customers want to listen and engage with friends on social networks, get recommendations on buy-
ing decisions, blog and tweet about their interactions, and obtain expert support quickly and easily through the web. Right now would be a
great time to build a plan as to how you will reach your target audience and ensure they engage with your brand to incentivize repeat visitors.
Here are some of the areas you many need
to jump-start or revamp: 1.Larger focus and
investment into mobile interactions. Mobile
2009 appears to be the year that
phone browsers are vastly improved along with social networking solutions began
hardware that can search and display content
—Marti Beller to address real enterprise objectives
(text, images and video) faster than ever. 2.
President Look at how multiple touch points (corpo- for both B2B & B2C businesses.
Any time the status quo is Affinion Loyalty Group rate web site, mobile, call centers, commu-
shaken up, it’s easy to focus nity, and other social sites) with customers
on the resulting threats that emerge. However, these shake- can be integrated so that you are leveraging a For example, if you’re measuring web referrals from
ups present new opportunities for those who can view threats multi-channel experience and not being seen as social, then measure how those visits are converting
as a chance to improve upon business as usual. For instance, a disparate company. And, 3. Measurement—as to buyers. If you’re measuring page views, find out how
some financial services firms have chosen to view consumers’ in knowing the net effect. When it comes to so- many of those were paying customers.
renewed interest in budgeting as an opportunity to position cial, many companies have just begun to evalu- 2009 was one of the greatest evolutions in social web
—Dan Ziman
themselves as partners who can help customers to better man- ate their efforts, while others have had strict interaction, and no doubt 2010 will bring a new set of
Director,
age their finances. Take Chase’s new offering, Blueprint. Blue- performance metrics from the start. Either way, ways to engage. I know we have got to take those extra
Marketing Programs
print is a financial management tool that allows customers to it’s more important that you measure what ac- steps to stay ahead of the competition and maximize our
Lithium Technologies, Inc
select which purchases they wish to pay off immediately and tion your prospect or customer took as a result. marketing investments. L
which they prefer to finance over time. Spend tracking tools
that help customers manage spending in various categories
round out the offering. While the net effect of this service is
not new, the way in which it is implemented is visionary. It
promotes customer engagement by encouraging consumers to
actively participate in managing their spending at a detailed
level. This kind of engagement will help Chase to retain their
most valued customers despite regulatory and economic head-
winds. Other banks are also seizing upon these trends. Bank of
America’s ‘Add it Up’ program and Discover’s ‘Spend Analyzer’ I’m beIng pulled In a mIllIon
tool, both introduced this year, seek to align themselves with
current customer needs.
dIfferent dIrectIons. except yours.
As loyalty managers emerge from 2009 and look forward
to the years ahead, they will need to adapt to a landscape
where accountability and restraint dominate the new con-
sumer mindset. Today’s customers demand engagement
from those companies they do business with throughout
every stage of their relationship with products and servic-
es that provide value and a sense of control. Those orga-
nizations that can fill those expectations by transforming
negative news into positive strategies will earn long-term
customers and increased market share.
email mobile website display ads direct mail call center point of sale
connect wIth more people In more ways.
In a world where consumers are bombarded by marketing impressions, Acxiom
enables marketers to reach the right people with the right message across all key
marketing channels: email, mobile, website, display ads, as well as offline.
GLOBAL INTERACTIVE MARKETING SERVICES www.acxiom.com • 888-3ACXIOM
 LOYALTY FORUM: BEHIND THE BRAND/PEOPLE

2010

Kim Marotta is Vice President Corporate
Social Responsibility at MillerCoors. In
her role, Ms. Marotta is responsible for
implementing MillerCoors' sustainable
development strategy and managing
MillerCoors' alcohol responsibility initiatives.
She also works closely with both parent
organizations, SABMiller and Molson Coors,
to drive performance in these key areas.
Kim Marotta
Vice President Corporate Social Responsibility
MillerCoors, Llc
Before MillerCoors you were a trial lawyer. How did you decide to
make the change from lawyer to corporate executive?
I truly enjoyed being a trial lawyer but after thirteen years of practicing criminal
defense law, I was looking for the opportunity to expand my skill set and
challenge my capabilities in a different profession. When I was a trial lawyer,
I worked closely with the local and state non-profit agencies and tried to
partner on initiatives that created jobs, offered alcohol and drug treatment,
and improved our communities. My role as Vice President Corporate Social
Responsibility for MillerCoors has allowed me to expand my passion and
commitment to creating better and stronger communities while continuing
to create sustainable partnerships with local, state and federal non-profit
organizations.
You’re responsible for Corporate Responsibility. What exactly does
that mean?
At MillerCoors, we wholeheartedly believe that with great beer, comes great
responsibility. That’s why we’re working to grow our business the right way
by focusing on five key responsibilities: alcohol responsibility, environmental
sustainability, people and community investment, a sustainable supply chain,
and ethics and transparency. My job, along with my team, is to create and
implement programs and initiatives in each of these areas. You can check out
our new web site GreatBeerGreatResponsibility.com to learn more about what
we do.
If you weren’t working for MillerCoors, what would you be doing?
I’d be working in some capacity in the legal profession, preferably as a judge.
2010 Resolutions
1. I will celebrate life’s special moments—Starting on New Year’s Eve by making the most of the
rare, blue moon which only occurs approximately every 20 years and celebrating with an equally
rare brew: the limited-edition Blue Moon Grand Cru.
2. I will cut calories—And enjoy MGD 64, a light-refreshing beer with only 64 calories.
3. I will be responsible—And plan ahead to always designate a driver.
Which book(s) are you currently recommending?
I would recommend Loving Frank by Nancy Horan. It’s a riveting story about Frank Lloyd Wright
and his mistress, Mamah Cheney, and their much publicized affair. While Mamah made
tremendous personal sacrifice to pursue her love for Frank, in the end she died tragically.
Which talent would you most like to have?
I wish I had a beautiful singing voice…Actually, any singing voice would be great with me. I love
music, but know better than to sing out loud for fear that I may bring down the rafters—but not
in a good way.
Which person has made the most impact in your life?
The person who had the most impact on my life is my grandmother, who we affectionately
referred to as Nonnie. Not only did she help raise me and my brother and two sisters, but she
also moved in with us after our first child was born and helped us raise our children. She lived
with us for over ten years—until the age of 87—and brought a lot of love into our home. She also
taught me many valuable life lessons such as:
• Sit down with your family and have dinner every night no matter what time the food gets on
the table. It’s more important to spend the time with your children than to be prompt with the
meat and potatoes.
• Always buy the kids snow boots before the first snowfall because after that you’ll never be able
to find them on the shelves.
• Never give up on the Chicago Cubs.
Please tell us about your last ah-ha customer
experience.
Recognizing that a company’s commitment to
sustainability is important to consumers and that it
influences their purchasing decisions and brand affinity.
What can we expect from MillerCoors in 2010?
We’ll continue to make the best beer in the world. We’ll
also continue to promote responsible consumption of
our products, support our communities and enhance our
efforts on sustainability.
Word of advice for a novice marketer:
While my marketing expertise at MillerCoors is limited
to the areas of alcohol responsibility and sustainability, I
believe it’s important to have a strategic vision and theme
that’s reflective of that vision. More importantly, you must
believe in that vision and commit resources to it in order
to inspire others to do the same. L

What do you consider your greatest achievement?

Being a mother of four healthy, happy children.

When you’re fortunate enough to have free time, how do you spend it?
I am passionate about golf—although there are days when my game seems
more like work than pleasure.
What’s your personal motto?
Laugh often and love much.
For years, I was proud that all of my children enjoyed the game, that is until
my twelve-year old son and fourteen-year old daughter both started driving
their balls thirty yards past mine grinning and laughing all the way. The game
really lends itself to great camaraderie among friends and family.

My role as Vice President Corporate Social Responsibility for MillerCoors

has allowed me to expand my passion and commitment to creating
better and stronger communities while continuing to create sustainable
partnerships with local, state and federal non-profit organizations.

16 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 17

 LOYALTY FORUM: BOOKS

Loyalty Reads EMPLOYEE ENGAGEMENT:

A Roadmap for Creating Profits, Optimizing Performance, and Increasing Loyalty
by Brad Federman
August 2009 | Jossey-Bass

“I LOVE YOU MORE THAN MY DOG” “If you think you know everything it takes to attain associate/employee engagement, put
Five Decisions That Drive Extreme Customer Loyalty in Good Times and Bad yourself to the test. This book provides a holistic approach to engagement that will create the
by Jeanne Bliss (A 2010 Loyalty Expo Speaker!) competitive edge required to succeed in this economy.”
October 2009 | Portfolio -Sharon S. Bilgischer, senior manager, logistics global talent, curriculum and documentation,
Consumers now more than ever are carefully considering how they spend every dollar. At the same time, social Wal-Mart Stores, Inc.
media that gives buyers a public forum for their thoughts and experiences is enjoying a meteoric rise. Together, they’ve created a There is clear and mounting evidence that employee engagement keenly correlates to individual, group, and corporate
completely new business culture, one where businesses need not just loyal buyers, but passionate, vocal fans—the kind that rave about you to performance in areas such as retention, productivity, customer service, and loyalty. This timely treatment provides a
friends, neighbors and even complete strangers and drive explosive growth via Twitter, Facebook and e-mail. comprehensive framework, language, and process that genuinely connects People Strategy with Business Strategy. It
Only an elite few businesses have these true advocates, and no one knows how to create them better than Jeanne Bliss, who has served as the offers a research-based blueprint for looking at employee engagement with the same regularity and importance as any
senior customer executive at Lands’ End, Allstate, Coldwell Banker, Microsoft and Mazda. Her new book, “I LOVE YOU MORE THAN MY DOG” other aspect of the organization.
Five Decisions That Drive Extreme Customer Loyalty in Good Times and Bad, outlines the five decisions that a company must make in order to catapult
itself from mere business to beloved company—deciding to believe, deciding with clarity of purpose, deciding to be there, deciding to be “real” and
deciding to say sorry.
The book pulls examples from companies who have enjoyed almost cult-like status among their customers, including Trader Joe’s, Harley
Davidson, Zappos and Zane’s Cycles, which sells more than $13 million worth of bikes from a single store. In “I LOVE YOU MORE THAN MY DOG”
Bliss explains how implementing these five decisions can truly transform your company, elevating it to beloved status and inspiring customers to TAKE THEIR BREATH AWAY:
begin telling your story for you, forming an army of cheerleaders who will, in essence, do your promoting for you. How Imaginative Service Creates Devoted Customers
by Chip R. Bell, John R. Patterson
May 2009 | Wiley

Enter to win one of ten copies of “I Love You
READ AN EXCERPT FROM JEANNE’S BOOK. More Than My Dog” by Jeanne Bliss. Tell us
Chapter One from “I Love You More Than My Dog” what company (or brand) has earned your love
& devotion. Who do you “Love More Than Your
is available at Loyalty360.org Dog?” Write: mailbag@loyaltymangaement.com
“Are you bored? We’re so spoiled that when something is merely good enough,
we just walk away. Chip and John explain that the surefire method for growth and
customer loyalty is simple: don’t be boring.”
—Seth Godin, author of Purple Cow
and Tribes
“Take Their Breath Away shows how legendary customer service delivery can win
and keep devoted customers for life. I LUV this fantastic book.”
—Colleen Barrett,
President Emeritus, Southwest Airlines Company

THE SOCIAL MEDIA MANIFESTO: The Revolutionary Guide to Build, Manage,
and Measure Online Networks in Business
by Brian Solis
February 2010 | Wiley
What if you had an instruction manual for Social
Media? Now you do. The Social Media Manifes-
to is the ultimate guide to branding and building
your business in the era of the Social Web.
The Social Media Manifesto thoroughly exam-
ines the social media landscape and how to ef-
fectively use it in business—one network and
one tool at a time. The guide for branding your
business in the era of the social web, this book leads
you through the detailed and specific steps required for conceptualizing,
implementing, managing, and measuring a social media program. Both
small businesses and Fortune 500 companies will increase visibility over
their competition, build communities of loyal brand enthusiasts, and ul-
timately increase profits.
•Everything you need to know about social media marketing, start-
ing with where you need to start and how to determine which social
networks to participate in and why
•How to come up with effective ideas based on the proven examples
of other peers and companies
•How to get buy-in from the team
•Ways to establish a supportive ecosystem for these new activities
•Specific advice for building a brand and community in each network
•Direction in participating in each network in ways that benefit your
personal and professional brands
•Keys to increasing revenue and inspiring action based on goals
•Defining and measuring ROI and adapting it to existing benchmarks
and metrics, while defining new methods for measuring success over
time
•Advice for creating new opportunities and marketing programs us-
ing lessons learned in social media
This is the first book that includes everything readers need to learn, begin,
and accelerate effective social media programs. Readers will walk away
with everything they need to know in order to turn the Social Web into a
powerful tool for branding and building their businesses.
“No one knows more about creating profit through service than Chip and John. If you want to know the best
way to do it, read Take Their Breath Away. The examples in this book will certainly start your creative juices
flowing and help your organization take your customers’ breath away.

—Howard Beharformer, President, Starbucks Coffee International
Take Their Breath Away shows you how to create exuberantly devoted customers by providing peerless, mind-blowing customer experi-
ences that leave them stunned. Like casting a magic spell, inventive customer experiences transform people from simple buyers into
faithful brand advocates. In an era when value-added has gotten way too expensive, value-unique can provide a fresh approach to
getting bottom-line impact.
Using real examples, this provocative guide shows you how the best brands create unique, customer-endearing practices that lead to
irrational loyalty. The book reveals twelve amazing and imaginative strategies, explaining how they work and how to implement them.
Whether you operate a giant corporation, a small business, or the department down the hall, these strategies will amaze you and
surprise customers.
There is a huge difference between good customers and those who are truly, passionately devoted to a brand or organization. The kind
of customers you really want are those who forgive your brand when it makes mistakes, recommend your business to everyone else,
and defend it when others are critical. Those aren’t just customers; those are devoted followers—and they can make all the difference
between chasing after your competitors or leaving them in the dust.
Take Their Breath Away gives you the inspiration, practical strategies, and creative ideas to enchant, surprise, and treat your customers
to something more than just an encounter. Learn to take your customers’ breath away and they’ll take your brand to heart.

18 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 19

 FEATURES
I
n 2009, companies have been just
trying to persevere. They didn’t really
know what to do with their people initia-
tives. The world was injected with mixed
messages. We talk about the fact that people
aren’t motivated by “cash” and yet we reflect
on the drivers of corporate behavior such as
AIG and Bernie Madoff—where greed is the
apparent elixir. The toxic behavior of certain
leaders derailed the trust relationship be-
tween many groups of people: manager and
employee, shareholder and company, govern-
ment and corporate governance, and general
public and the establishment. The resulting
knee-jerk reaction of the business commu-
nity was to pull back spending on programs
aimed at motivating employees and channel
partners.
Corporations treated “worker” separate from
“consumer” and failed to realize that they are
two sides of the same coin. When we live
as a consumer we are aware of the way we
want to be treated, and realize that this is
the way we should treat those we serve.
Redefining Leadership The supply side of the equation was para-
lyzed by political and resultant negative pop-
LEADERSHIP with a capital P... for People ular opinion. While companies ran for cover
on the supply side they needed to stem the
tide of lost customers, and established loyalty
by Rick Blabolil, Marketing Innovators International, Inc.
programs to keep or earn their business.
The irony is that corporations treated
“worker” separate from “consumer” and
failed to realize that they are two sides of the
We all can attest to a changed world. 2009 has set the next standard for the speed by which same coin. When we live as a consumer we
we will inevitably live. Whether you call it change, transformation or evolution, business will are aware of the way we want to be treated,
remain in a constant state of flux. The flow of information, global interaction and the variability and realize that this is the way we should
treat those we serve. This becomes more
in decision making are the ingredients of a perfect storm. These observations are not about doom
obvious in difficult times. We become more
and gloom—they are perceptions and reality. How we deal with them will be the test of our empathetic with others. But too often this
optimism and our leadership. wide spread empathy is short circuited by
the senior leadership of big companies. Such
What have we witnessed in relation to incentives, recognition and loyalty? was the case this year as too many companies
20 Loyalty Management™ • LOYALTY360.ORG
reduced their work force, reduced benefits
and expected people to produce more and
wait blindly to be acknowledged or appreci-
ated for their efforts while serving their best
customers.
While companies sense the world is pass-
ing through a profound transformation, they
are frequently looking for answers to guide
their understanding and help them make the
best decisions. Those that are quick to adapt
have a rare opportunity to create a competi-
tive edge by selling in the “new normal.” The
name of the game is transformation…and a
new kind of leadership.
A little over a year ago, everyone was talk-
ing about the war for talent. The threat of
losing the baby boomers in the workforce
to retirement fostered a concern that expe-
rienced leadership would leave a vacuum in
corporate management. The recession has
changed this assumption dramatically. Baby
boomers, along with most of the workforce,
are desperately hanging on to their jobs.
With individual retirement funds and sav-
ings in crisis, most boomers will not be retir-
ing for another five years or more. Boomers
staying in their jobs, combined with those
who have been laid off this year, will create a
long jobless line for younger workers. The re-
cession is also forcing people to take any job
to generate income and health care benefits.
This has created a diverse mix of ages and de-
mographic profiles in jobs at all levels.
The atmosphere in the workforce is ten-
able at best. Unemployment is rampant and
will plague our society for several years. The
capital markets have recovered a certain
amount of corporate value, but there re-
mains immense volatility in light of wide-
spread uncertainty. Three-digit swings in
the DOW are common place. Productivity
is up, but national unemployment is 10.2%.
As such, “job satisfaction” is up for the
mere reason that having a job is satisfying
enough. In cases where hiring is occurring,
it’s now common that the skill sets of those
being hired are “overqualified.” Companies
are taking advantage of this phenomenon of
high value, low cost.
Market volatility and focusing on short-
term rather than long-term will force a
rethinking of how decisions are made and
money is earned. The masses are making
their statement; the consumer will cast
their vote through purchasing. “Corpo-
rate social responsibility” is being pulled
through by the public. In reaction to the
economic downturn, companies have taken
notice of thinking more broadly—beyond
their boardrooms. Our planet and our peo-
ple belong in the same dialog as profit.
So who will consumers be loyal to? Due
to the distrust, loss of wealth, higher costs,
government intervention and recession,
people will look for “good people” to work
with, work for and buy from. Do they trust
the company, the brand, the people run-
ning the company or the people in the front
lines? Corporations will have to step up to
corporate social responsibility in order to
create loyalty from both internal and exter-
nal audiences.
continued on next page »
Loyalty Management™ • WINTER 2010 21
 Redefining Leadership (continued)

Predictions for 2010 2010

Flexibility is the new normal.
The baby boomers have a new timeline, and
those who were set to retire will remain
in the workforce for several more years.
Loyalty is Earned.
The interesting aspect is that not only will
companies choose the “over-qualified”
workers because they are available at a low
cost, but they will incent them. Companies
realize their value and will find a way to
hold on to them as long as possible. As
the economy turns around there will
be new fluctuation and turnover. In the
meantime, there will be wide variance
Leadership will need to redefine itself. of the demographics and skills of people
Based on the combination of these factors, leadership will have to be redefined. holding similar jobs in the workforce, and
Successful leaders will need to be focused on people. They will need to be authentic it will confound the norm. Job performance
and genuine in seeking conversation and collaboration—and mean it. There cannot
will blur beyond job descriptions and
be lip service; this will get flushed out in these market conditions. The intent of
compensation. Recognition and incentives
leadership and its purpose will be rewarded or rebuked, depending on the level of
will become more creative to accommodate
trust and loyalty it has built with its employees and partners. This is when people
the over-qualified, and reward systems will
will become the defining factor.

This is not a story of “kumbaya”—it

become very personal.

It’s a conversation economy.

Does your brand have a loyal following?
is about changing a mindset in light The “sales proposition” has evolved into the

of an economic downturn. “buyer’s proposition.” Sales 2.0 is about the Loyalty goes beyond points and transactions.
alignment, collaboration and acceleration
that results from embracing the buyer’s
It is the mechanism that engages your brand with consumers.
Leaders will need to know that people are a company’s greatest assets, and their
front line of defense in tough economic times. Working with their employees, suc- perspective and needs in your company’s
cessful leaders can weather the storm and position themselves advantageously for go-to-market strategy. It combines
better economic days. They understand that their employees and channel partners customer-focused processes with Web 2.0
Epsilon knows loyalty.
are the means to innovation, cost savings, increased profitability, organizational productivity and technologies to enhance Our loyalty marketing thought leaders can help you build
growth, and more satisfied and loyal customers. the art and science of selling while creating
Leaders will need the fortitude and courage to run against Wall Street’s addic-
customer value. This is not a fad, it is a
loyalty solutions that create meaningful customer interactions.
tion with short-term results (quarter by quarter) and manage for the long-term—a
paradigm shift. The old top-down “push”
series of quarters strung together with a vision of continued success over time.
approach has become obsolete in today’s
So what is profound in 2009? The wave of economic success driven by think-
marketplace. The power has switched
ing only of “me” has washed up on the beach. Society and business must redirect
itself to the mentality of “us.” It’s no longer about how great an individual we are, from the seller to the buyer in the new
it’s about how we function together. The sales proposition will be about the buyer “value provider” mindset. Companies must
not the seller. Competition will remain important, but winning at the expense of demonstrate a real understanding of their
someone else, or by negatively impacting our society or environment, should not be customer’s needs and be ready to deliver a
part of the win/win strategy. solution tailored to align with each client’s
This is not a story of “kumbaya”—it is about changing a mindset in light of an eco- business objectives. Are sales people nimble
nomic downturn. Unemployment is likely to remain high for the next 24 months and agile enough? Incentives, loyalty and
and consumer credit will be tight. Corporations will need to value the contribu- engagement initiatives can play a key role
tions of their key asset—people—while they navigate cost containment. The busi-
in driving and rewarding behaviors that help
nesses that truly do the right things for the right reasons will attract the top talent,
create the required change and lead to the
customers and investors. Loyalty will be a function of clearly communicating the
desired results. *&O;7HIE<C7HA;J?D=;N9;BB;D9;
heart of a company, its intent and purpose. That’s capitalism at its best. L

'$.&&$)&/$&+&+r_d\e6[fi_bed$Yecr[fi_bed$Yec%beoWbjo

22 Loyalty Management™ • LOYALTY360.ORG

 FEATURES
Evolutionary Trends:
Driving stronger relationships for improved
business results in 2010
by Taylor Duersch & Catrina McAuliffe, Carslon Marketing
L oyalty marketing is evolving, and the trends year to year aren’t
dramatic; they’re evolutions. When you look at what really drives suc-
cessful relationship marketing, the foundations haven’t changed that
much—nor should they. What’s changed are the cultural and techno-
logical advances to support the core elements of good marketing to
drive customer relationships, engagement and loyalty.
We’ve highlighted some trends and made some predictions for 2010
around analytics and customer dialogue specifically that we’re seeing
locally and globally, across the street and around the world. The com-
mon denominator? All roads lead to building stronger customer rela-
tionships.
Fueling The Analytics Engine
A golden age of marketing analytics is upon us. Over the past few
years several bestselling books have espoused the value of analytics
to drive decision making in every aspect of business and across every
industry. At the same time customer loyalty programs continue to pro-
liferate as a means of capturing and linking the data required to fuel the
analytics engine. Two prominent analytic objectives are being adopted
almost everywhere we look.
1. Improve the efficiency and effectiveness of marketing spend down
to the penny.
2. Find opportunities in the customer data to get partner participa-
tion and funding to offset loyalty program costs, increase revenue
streams, acquire new customers.
In 2010 companies will go after these objectives in a ways that will
eventually lead to the Holy Grail of customer relationship management.
Here’s how:
First, companies will continue to get bigger and faster in
terms of the data available for analysis and the degree to which
every useful nuance in the data can be discovered. Companies
will increase their use of data appliances which speed data processing
and analysis by factors of 10 or even 100. Suppliers like Kognitio, Ne-
tezza and Xtreme Data are enabling marketers to sift every transaction
from every customer over extended periods of time revealing opportu-
24 Loyalty Management™ • LOYALTY360.ORG
nities to increase sales via strategic offers and product bundling.
This is true in industries from telecom to grocery.
The volume of analytics that can be done in the presence of
these data processing speeds and the innovations that will occur
will be staggering when compared to what was being done even
two years ago. Best of all, the price is right when compared to the
cost of the infrastructure many large and mid-sized companies
have employed to enable even the most rudimentary of analytics.
Second, companies will get smarter. They will get smarter
about how they make money from customer relationships and will
realize that the relationship outcomes matter just as much as the
effectiveness of programs and tactics. This will motivate market-
ers to find and implement marketing tactics that not only improve
the effectiveness and efficiency of marketing spend, but that do so
while building the strongest possible relationships with customers
and prospects. Don’t think this matters? Then watch out for those
that do. Soon we will see the emergence of companies that can
and do profitably build one-on-one customer relationships, with
every customer, in a way that destroys customer consideration for
competitors and puts out every relevant product and service of-
fered by the company, building that relationship into play.
Interactions Not Just Transactions Drive Stronger
Customer Relationships.
To build successful customer relationships, and to build loyalty
marketing programs that will “win” in today’s market, requires
that companies recognize customer interactions count as much
as customer transactions. This means looking at a customer from
more than just the economic side. But primarily we see a continual
focus on companies recognizing the economic side of the equa-
tion, rather than recognizing the value of every interaction of that
customer—whether it’s using multiple communication channels,
writing reviews, referring peers, etc. The value of building relation-
ships based on the “whole” person will drive a new perspective
and greater understanding of your customer to put you on the path
to building stronger relationships and improved business results.
Customer Dialogue - It’s All About Me. And Me.
We all know from personal experience life is busy. There’s fast-talking dia-
logue on television; advertising on the internet, and even in the bathroom stall;
it’s on the television, the subway, the highway; and there’s direct mail, junk
mail and e-mail that’s anything but relevant to me. At the same time, we all
have more control than ever to choose who we engage with visually and con-
versationally—DVR’s, no-call lists, email opt-out, and the ability to ignore con-
nection requests. So what’s going to happen in 2010? We see three key trends:
1. Make it About Me - Emergence (or Resurgence) of “Me”
There is so much going on, consumers are spacing everything out, except
when it is obviously and demonstrably personally relevant. This has a few key
consequences.
Be seen as wanting to know, hear, acknowledge and respond to customer
concerns. Listening has never been more important or relevant. Standard an-
swers (ex. FAQs) only take you so far, logic also has to play a part of the con-
versation—making sure that the answer takes into account the situation, the
customer value, their emotional state and their ability to influence others. It is
a challenge to do this without dialogue.
An interesting outcome of this has been the emergence of “we research”
both among consumers and corporations. A recognition of the importance of
trusting our own judgment and similarity to our consumers in our decision-
making ability.
There is so much going on, consumers are spacing
everything out, except when it is obviously and
demonstrably personally relevant.
2. Today’s Cause Is “Me”
Recent proprietary research conducted by Carlson Marketing examined
two concepts, one for a cause-related program and one that helped consum-
ers save money. When rated monadically both appeared to perform identi-
cally. However, when asked to choose between the two, consumers chose the
one that directly benefited them. We believe the recent economic events have
forced consumers to protect their own and their families interests first, in spite
of good intentions. Consumers are often interested in a deeper relationship as
long as there is something in it for “me”:
•make “my” life simpler
•meet “my” need for products, emotions, experiences and connections
•let “me” serve myself until “I” need you, then be ready to help “me”—
whatever it takes
Predictions for 2010
2010
First, companies will continue to get bigger and faster in terms of the
data available for analysis and the degree to which every useful nuance
in the data can be discovered. Second, companies will get smarter.
This trend is likely to continue both metaphorically and literally.
Literally, “causes” today act as “Merit Badges” (Iconoculture).
In 2010, it’s worth thinking through “what does your brand/
company represent that resonates with the consumer?”
•Are you connecting with causes that are relevant to them?
•Are your positive actions making it easier for them to jump
on the bandwagons they believe in, but wouldn’t otherwise
have a reason, understanding or connection?
•environmentally-friendly
•natural/organic
•locally produced
•fair trade
•humane
Metaphorically, the economy has made it not only socially ac-
ceptable, but cool to be a smart shopper. Thrift is a “badge” for
many consumers and a reflection of concern for themselves and
family. Recognizing this in dialogue is important to remember
and defining the “right” value proposition is key.
•ostentation is out, and savings and “smarts” are in
•belonging to rewards programs and earning “something for
nothing” is a sign of “smarts” rather than miserliness
•understanding the balance of emotional and rational reci-
procity is crucial; rewarding loyalty and advocacy is a ne-
cessity for successful long-term customer retention; soft
benefits are as potentially important as hard benefits
3. Consumers are seeking reliable sources they can trust
Today these sources tend to be their peers rather than tradi-
tional icons like “brands” or “experts.” Those companies who ad-
vocate for consumers (or their causes) will also engender greater
trust. But credibility, or the lack thereof, has never been so chal-
lenging. That’s the draw of social media like Facebook or Twitter,
where you can engage with people you know and trust. But even
here, among friends, there’s competition for your time—do you
connect with friends, play the games, connect to the links, take
the quiz, test your intelligence, read the fan pages, connect with
your favorite brand(s)? Conversation is interactive, but how can
you have a conversation with someone you don’t know?
Listening is key to successful conversations and the core ele-
ment essential for consumer dialogue to building better relation-
ships. Listening can enable understanding of personal interests
and motivations. Relevance will drive engagement, recognizing
“I am the cause.” And transparency of intent and behavior are in-
creasingly essential for credibility.
So, the net of this for 2010 is that evolutionary trends will drive
stronger customer relationships for improved business results,
locally and globally, across the street and around the world. L
Loyalty Management™ • WINTER 2010 25
 FEATURES
Approaching a New Decade
with New Strategies:
Partnership Marketing
by Brittany Simmer, Vesdia Corporation
A s we begin to recover from holiday festivities, it might feel
like there’s not much to celebrate in the world of marketing. There’s
no question that 2009 has been a tough year. During an economic down-
turn, often the prevailing mindset is to cut marketing dollars. Recent
studies have taught us better, but it’s still difficult for CMOs and CEOs
to cut big checks for programs which may or may not show a real ROI—
and even more difficult for CFOs. Measurable results—not just impres-
sions—have never been more important. According to iMedia, 59 percent
of marketers said that they plan over the coming months to “heavy up” on
measurable, result-driven strategies, stating that if “we can’t prove it’s
working, we’ll slash it.”¹ At the same time, consumers are in the midst
of trying to increase the value of each dollar spent, often throwing past
loyalties out the window. Merchants, in turn, are challenged with the cost
of acquisition.
With all those challenges we faced in the economic upheaval of 2009,
marketers may be ending this year feeling a bit beaten up. But, we at Ves-
dia are optimistic and by this time next year we’ll be singing “Auld Lang
Syne” to some out-of-date marketing strategies and tactics and raising
our glass to the next generation of partnership marketing.
When used properly, partnership marketing can
reduce operating costs while establishing a
meaningful dialogue with consumers, building a
relationship with the customer that marketers could
never achieve before.
Leading the Way: Reward Programs
Partnership marketing is a measurable marketing medium with the abil-
ity to cross into the growing world of multi-channel customer and retailer.
Reward programs, armed with partnership marketing in a multi-channel
environment, are increasingly the most important feature of payment
cards. These programs are becoming the foundation of differentiation, of-
fer a competitive advantage, and have grown to cater to vastly diverse con-
sumer needs.² Consider the brand experience stages:
1.Before the Purchase:
•Over 60% of U.S. households said that loyalty card programs were
important in their shopping decisions. (AC Nielson Survey)
2.During the Purchase:
•Consumer spending is 46% higher with companies that offer loyalty
card programs. (Loyalty Monitor study by Total Research Corp. and
Custom Marketing Corp.)
¹iMedia, Brand Summit, February 8, 2009
²The Future of Credit Card Rewards Programs
26 Loyalty Management™ • LOYALTY360.ORG
3.After the Purchase:
•Companies can increase revenues by nearly 50% by retain-
ing only 5% of their customer base. (Frederick Reichheid, au-
thor of "The Loyalty Effect")
But currently, participation in reward programs is an under-uti-
lized tool in every marketers arsenal. This is due in part to a historic
lack of attention paid by reward program operators to merchants,
even before the purchase takes place. Reward programs’ focus has
been traditionally after the purchase has been made, how a con-
sumer can redeem their reward currency, without acknowledging
how, why or, most importantly, where the consumer made their
purchases to achieve their reward. However, loyalty providers are
leading the way into a new era of marketing: a pay-for-performance
Reward programs, armed with
partnership marketing in a
multi-channel environment,
are increasingly the most
important feature of payment
cards.
model which creates a foothold in partnership marketing, giving
consumers the opportunity to earn desired rewards faster, opera-
tors more value to their reward program, and merchants a much
lower cost of acquisition and the ability to develop lasting loyalty.
There are three distinct constituencies that help create a pow-
erful partnership marketing solution: consumers, reward program
operators and merchants. Each of these constituencies has a unique
set of interests their loyalty provider need to satisfy:
•Consumers are looking for enhanced earning opportunities,
and the ability to earn rewards at a higher rate for purchases,
tied to a payment card routinely carried in their wallet. dollars on traditional media without the ability to measure success
•Reward Program Operators, which are usually defined as cred-
it card loyalty or frequent flyer programs, find that when con-
sumers are earning at a higher rate they can also anticipate an
overall increase in card usage, higher customer retention rates
and increased satisfaction and activity over time. ing is hard work and there are no short cuts. Setting goals, consis-
•The Merchants, the least understood from the perspective of
the loyalty industry, are the most important component to these
programs. Merchants have the opportunity to take advantage
of million dollars worth of multi-channel, reward program
marketing communications, leverage existing brand equity and
access an engaged audience inclined to purchase loyally.
2010 New Year Predictions
Here at Vesdia, we’re optimists. We believe the contraction in consumer spending will rebound by 50%
in 2010. Though we also believe it will be the Year of the Consumer, with loyalty being redefined, companies will have
to provide consumers with additional perceived value in order win their business. I also believe the USC Trojans will
go 13-0 in the regular season.
Proving the Mettle of the Marketing: Reporting
When it comes to proving marketing’s ROI to your CMO, CEO
and that lovable CFO, wouldn’t it be fantastic to provide meticulous
reporting, tracking of performance over time and various other
types of measurements to prove the business case over and over
again? While some metrics have value (e.g. CMPs), the most power-
ful data will ultimately drive business growth and use insight from
current activities to determine where the dollars should be going.
Partnering with a loyalty provider, due to their strategic relation-
ships with reward program operators, allows merchants to “slice
and dice” shopper spending data to demonstrate the true value of
their marketing. Other popular attributes of partnership market-
ing are “before and after” tests to track purchase volume through a
particular base of consumers, measuring marketing share of mer-
chant partners vs. competitors, allows for various types of reward
currency, and reporting down to the individual transaction level.
The long-term results of utilizing partnership marketing via a
reward program go beyond sales. Research by Colloquy, a loyalty
marketing consultancy, found that reward program members are
70 percent more likely than others to actively recommend products,
services, and brands.³ It’s those consumers who will keep coming
back, helping to grow your brand in any economy.
Regardless of the economic environment, spending millions of
or target consumers is no longer an effective or viable consider-
ation. Data shows partnership marketing solutions drive consumer
spending in a more meaningful, measurable and cost-effective
manner. We must understand, however, that partnership market-
tent communications and adjustments based on feedback are the
keys to success.
I invite the industry to enter 2010 embracing that idea. Develop
these types of alternative marketing strategies that can be proven
to help grow business. If that happens, we’ll all be ready to celebrate
this time next year and toast to something more substantial then
just surviving. L
³MediaPost, Reward Programs Members are Brand’s Best Friends, By Les Luchter
Loyalty Management™ • WINTER 2010 27
 FEATURES

An Economic Bright Spot Independent research backs this up. “Of the marketers in our

Investing in Customers
Despite the slow recovery and cautious budgeting, one area
clearly not affected by the recession is marketers’ investment in
retaining and enhancing the value of their existing customers. Simply
put, smart marketers are investing in customer loyalty when nearly
all other areas of spending are being cut.
survey, 71% report that their 2009 budgets have been reduced
relative to the budgets they had in 2008—and the cuts are hardly
insignificant. Just more than half of respondents report cuts of 20%
or higher.” 1 As this chart from Forrester Research shows, loyalty
programs and email marketing, two of the most directly retention-

Ahead of the Recovery

The logic is simple: Why tap into limited dollars on largely oriented marketing line items, are the 2nd and 3rd least impacted
unquantifiable advertising and promotion to boost new customer areas of marketing, coming just after social media, which is in its
acquisition when focusing on preserving and growing the value of growth stage.
an existing customer base is so obvious? The loss of a single “best
customer” requires the acquisition of ten to twenty new “average Maximizing Loyalty Investment
by David Rosen & Michael Greenburg, Loyalty Lab While loyalty has clearly been a bright spot in the dark economy—
customers.” In a world where typically seven out of ten newly
more than 50% of the top 200 national retailers have made
acquired customers fail to make a repeat purchase, converting a
meaningful investments in their existing or new consumer loyalty
fraction to a second purchase alone would drive consistent year-
programs in 2009 with large consumer household brands rapidly
over-year comparable sales. Identifying and cultivating as few as two
following suit—strong return on that investment is not guaranteed
percent of a customer base as advocates infuses a brand with new
based merely on desire and a checkbook.
customers with the highest likelihood of consistent, year-over-year
Using our basic loyalty framework—connecting strategies to
spend.
segments with outcomes impacting frequency, retention, and
advocacy; and based on our close work
with nearly 100 retailers, travel providers
Figure 1 – 2009 Marketing Reductions By Media Type2 and consumer brands over the past
Given your decreased budget, how much has your spending decreased in each of the following areas? two years, we’ve identified six keys to
maximizing investment in customer
TV, print, radio, or magazines loyalty.
Staff and training
Branding and advertising
1.Drive Customer Centricity from
Direct mail
the Top
Loyalty is not a promotional tactic—
Marketing technology
for that matter, loyalty is not really a
Online advertising
marketing strategy. Cultivating the
Web site development
relationship that brands have with their
Loyalty programs
customers lies at the core of companies’
Email marketing
cultures. The notion of customer
Social media
centricity is an old one, but companies
Base: 45 marketing leadership CMOs who have had their 2009 marketing budgets reduced getting the most out of their loyalty
Source: “Marketing Budgets Suffer Significant Cuts”, Forrester Research, Inc., July 2009
investment put customer experience at
the center of their culture. This cultural
2010 predictions change inevitably comes from the
leadership team—most often from the
1.Loyalty programs will seamlessly
CEO. Culture inspires a proactive focus
2010 will likely be known as the year the global economy emerged from the Great Recession. While loyalty marketing was integrate their social media and
on the customer, leading to initiatives
one of the few sectors that benefited from the downturn, the industry must now shift the tone of its message towards growth. community efforts by explicitly
and ideas that improve the customer
Loyalty Lab’s David Rosen and Michael Greenberg outline the six most important areas where marketers can maximize their loyalty rewarding engagement more
experience and drive market share gains
investments as their focus moves from retaining best customers to creating significant numbers of new ones. broadly.
and advocacy. Culture instills a sense
2.Mobile will rapidly become the of purpose around every customer
Investing in Customers Ahead of the Recovery preferred channel and devise for interaction and every business decision
2009 has been a difficult year to justify additional business investment. Inventories have been depleted to save cash, factory orders as a result engaging with loyalty programs that aligns to a more loyal customer base.
have softened. Imports, production, consumption are stagnant, and most impactful on a daily basis: unemployment continues at near double- including the adoption of targeted 1
“Marketing Budgets Suffer Significant Cuts”, Forrester
digits levels. offers, delivered via mobile based Research, Inc., July 2009.
Signs of recovery are mixed but hopeful. In Q3 several signals showed a bottom in economic conditions, including the highest level of the on where members physically are at
consumer confidence index in a couple of years plus an upturn in the S&P/Case-Shiller Real Estate Index. But retailers, CPGs, and manufacturers that moment.
are experiencing significant anxiety regarding whether consumers will open their wallets in the 2009 holiday season. The NRF recently forecasted
3.Gaming will take on an even more
a 1% decline in 2009 holiday sales from already poor 2008 results.
prominent role in loyalty program
engagement while gaming will
increasingly look and behave like
loyalty programs.

continued on next page »

28 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 29

 Investing in Customers Ahead of the Recovery (continued)
2.Segment Priorities Rationally
Marketers cannot and should not attempt to place equal effort
against every customer. By going very wide, companies fail to go
sufficiently deep. But do not interpret this as a tacit recommendation
to ignore certain customers when they come through the door. Do,
however, recognize that there are many current and past customers
that just aren’t listening. Best in class loyalty marketers focus on
three basic segments:
•Retain Highest Value Customers: Typically 3% of customers
represent 25% or more of total value based on their own
spending and significantly more based on their influence and
advocacy. While they’ve behaved loyal in the past, the downside
of losing them in the future is huge. Their demonstrated
spending makes them ideal targets for competitors. Frequency
isn’t the issue here—retention is most important, with advocacy
a close second.
•Retain and Grow Next Best Customers: Often the next best
spenders, but more often those that have the potential to be best
customers based on category purchases, acquisition channel,
demographics or other brandaffinity traits. Generally the focus
is frequency, to take market share from competitors and other
substitutes. If it is still early in the relationship, there is an
opportunity to establish a connection that will endure for months
or years.
•Grow New Customers: Often the only time marketers have
customers’ attention is in the first few days of the relationship.
The window is very short—the experience must be special. Thirty
days later, they could be gone forever. In many cases, a simple
focus on a second interaction, whether it be a purchase or a
social interaction, is all that is needed to establish a relationship
that will lead to a loyal customer.
3.Separate Rewards From Loyalty
Many retailers, credit card companies, travel and consumer
brands confuse rewards with loyalty. Rewards and points are merely
a tactic for holding customers’ attention and managing the “give
to get” relationship with loyalty members. Real loyalty emanates
from superior products and services, great value, relevance of
communications, and in some cases, a shared set of values and
purpose. Rewards have a role in developing customer loyalty in
three areas:
•Gaining Permission to Track Activity: By rewarding activity,
companies give value in exchange for good data, which is also
of value. For many companies, the insights and other tactics
available from richer customer data alone is worth the price
of rewards.
•Financial Incentives For Relevant Customer Segments: Some
customers are responsive to financial incentives, whether it be
coupons, sales, or rebates. This group will change behavior solely
based on the program rewards. While this will not be 100%
of your customers, it will be a large enough segment to justify
investment and resources to maximize your return.
•Recognition For Relevant Customer Segments: Just as some
customers respond to financial incentives, other segments
respond to recognition. Again, this will not be 100% of your
customers, but it will be large enough to justify resources and
attention to maximize your return.
30 Loyalty Management™ • LOYALTY360.ORG
4. Model Consumer Value On More Than Purchases
Best customers should be quantified and identified based not
only what they individually spend, but on who they know, how well www.alterian.com
they promote the brand and to what extend their influence leads to
more purchases by others. A customer who makes a single purchase
of a product online, but follows up with a well-crafted review of the
product can influence hundreds of subsequent purchases. Marketers
must learn to identify customers who have influence and recognize
and reward that behavior as richly as they reward purchases.
5.Keep It Simple We need Are you
to talk engaging
The best programs are not necessarily the ones with the most
sophisticated rules. The opposite is more often true. Customers are
often members of many programs, often within the same category
with your
of product. As a result, the easier it is for customers to understand
the program’s value proposition, the higher levels of participation,
engagement and return on marketers’ efforts. Great marketers lead
with basic programs and innovate based on testing and learning. Build loyalty customers?
with Alterian
Great programs are successful based on very simple metrics of
enrollment, engagement, repeat purchase and retention—not the
most elaborate program design.
6.Learn and Adapt
Programs which are successful in the short term and long term
share one common trait—ongoing improvement and engagement.
Consumers are engaged on a regular basis through entertaining,
relevant, and timely interactions, whether they be promotional or
informational.
Link analytics to Make your website engaging
execution www. for the individual
Rewards help drive activity
and retention, but shouldn’t
be confused with customer
loyalty.
Make email a strategic Listen to how your brand
channel is perceived
Look Forward to the Future
A consensus of opinion exists that those companies that have
been most effective investing in customer loyalty in the recession
will be best positioned to grow most quickly when the economy
stabilizes and emerges from its current state.
Our internal experience with many top brands shows ROI turns
positive very quickly, as enrollment grows. Reaching a critical mass
of program members is the most important component of return in
the first year of a program, as fixed costs are quickly spread across a
wide base of members. Smart tactics can drive that ROI even higher,
as marketers leverage what they learn from early enrollees to tweak
messaging, funding, offers, recognition, and rewards. By starting
sooner, marketers will achieve this first milestone before (or just Request your complimentary “Little Book” of Integrated Marketing, Integrated Email Marketing,
as) the economy starts to accelerate, positioning their program for
greater success. L
Web Engagement or Social Media Marketing – Visit www.alterian.com/littlebooks today.
Tel: 312 704 1700 | Web: www.alterian.com | Blog: www.engagingtimes.com | @engagingtimes
 FEATURES

Across the Ocean Blue

The differences between European and American loyalty
programs and what drives the success of each
by Alexander Meili, ICLP

Loyalty programs have been a staple of North American customer strategies for more than Different approaches to communication
Results from ICLP studies on cross industry B2C programs from
With major US hotel and airline brands providing customers with
open choice but little to choose between, US programs have had
two decades, having successfully penetrated a variety of sectors, including airlines, hotels, Europe and North America show that one of the most apparent to innovate faster than European programs to create greater dif-
banking and retail. European programs, on the other hand, have had a slow start and, in differences between programs in each region is communication ferentiation to their audiences. American programs have therefore
with members. European loyalty programs are typically marketed maintained first-mover advantage in innovations like social media
some areas, still lag behind North America in participation and innovation. Many European
through below-the-line (BTL) methods and are seen as ‘relation- and web 2.0. This is particularly true of larger programs, such as
programs are a copy of American programs applied globally. Some, however, are following ship building’ exercises to develop long-term customer profitability. Starwood Preferred Guest, InterContinental Hotels Priority Club,
an altogether different philosophy about relationship marketing, delivering brand loyalty and Because of this they tend to have a strong focus on personal and American Airlines’ AAdvantage and even Procter & Gamble’s Vocal
claiming true competitive differentiation. Here, we’ll compare and contrast the two strategies. targeted communications. Point. Dell is a shining example of this sophistication in social media
Tesco is one of the world leaders in segmentation marketing, with strategy, and in June 2009 reported that it had earned $3million in
Understanding the history a 121-point contact strategy utilizing more than 9 million variants of revenue directly through Twitter since 2007. Dell Outlet curently has
European programs took root in the early to mid-1990s (roughly 10-15 years after American loyalty programs) with the their Clubcard statement where 624,000 followers on Twitter.
launch of frequent flyer programs such as Iberia Plus, Swissair’s Qualiflyer and British Airways Executive Club. Programs no three customers get the same European loyalty programs are typically Given the above short term
statement. Conversely, American tactical versus long term relation-
from hotels such as Accor and Sol Meliá followed shortly thereafter. This pattern has continued and today, there is a tre-
programs tend to also use tacti-
marketed through below-the-line (BTL) ship variations between program
mendous push in the European region to implement loyalty programs in sectors other than travel, for example SNCF’s
Grand Voyageur rail program; Germany’s retail Payback program; Belgium’s Carte Plus by retailer Delhaize, Italian retailer cal above-the-line (ATL) media methods and are seen as ‘relationship objectives in the US and Europe
such as radio, television and bill- it is not surprising there is an ap-
Esselunga with Fidaty, UK’s Nectar and Tesco Clubcard, as well as European versions of Air Miles in the UK, Netherlands
boards to ‘sell miles’ or promote
building’ exercises to develop long term parently large disparity in the
and Spain. Arguably, European programs (particularly in the UK, Germany and France) tend to have a strong focus on the
customer proposition whilst US programs are ahead in terms of number of members. this week’s special offer for dou- customer profitability. Because of this frequency of program commu-
ble points, which typically require nication. Many travel and retail
However for traditional loyalty programs both regions are approaching maturity and saturation. The average affluent
much higher budgets and have
they tend to have a strong focus on companies in North America will
North American consumer belongs to seven programs; the European consumer belongs to four. Eighty percent of European
consumers say they have at least one loyalty card or belong to a loyalty program; for American consumers, that number not been widely seen in Europe. personal and targeted communications. communicate weekly with their
rises to three.1 Both regions also report significantly more memberships than population. US loyalty programs collectively Hence programs in the US could members and importantly, that
have more than 1.8 billion members2; European programs, 900 million. 3 be regarded as being more of a short term tactical sales promotion is what their members expect. European customers, on the other
As well as being less promiscuous than their US counterparts, the European consumer also claims to be less influenced by tool rather than using more elaborate techniques like their European hand, receive monthly or quarterly mailers detailing activity, points
loyalty programs. 80 percent of North American respondents said they always show their loyalty card when shopping, com- cousins. accruals and corresponding rewards along with targeted offers. Any
pared to 50-60 percent in Europe.4 However, significant numbers of additional respondents across both regions reported Europeans were the first to actively engage mobile communica- more communication than this would be seen as overtly selling and
using their card frequently, which shows an overall engagement level not to ignore in either market. tions to promote interactivity with members. This is not surprising detrimental to a relationship. This can be largely attributed to differ-
given the fragmented nature of the US telecoms and cellular market ent cultural perceptions of how often customers like to be contacted
Different approaches to communication compared to the EU, where most countries have one home domestic before it is viewed as an invasion of privacy. Both adhere to official
Results from ICLP studies on cross industry B2C programs from Europe and North America show that one of the most carrier. Between 2006 and 2007, European programs operated by legislation in this area, although Europeans maintain greater focus
apparent differences between programs in each region is communication with members. European loyalty programs are Finnair, Aeroflot, Lufthansa and others began offering direct member on the emotional implications of excess customer communication.
typically marketed through below-the-line (BTL) methods and are seen as ‘relationship building’ exercises to develop long account access via SMS and WAP technology. This also helps to explain noticeable differences in the ‘look and
term customer profitability. Because of this, they tend to have a strong focus on personal and targeted communications. Today, American programs have caught up and are possibly mov- feel’ of creative. European communications favors a more mod-
ing ahead with smart phone applications in the travel and finance est design, using space generously to build a quality brand image.
1
Loyaltycard and ICLP research 2
Colloquy 2009 3
ICLP 4
Nielson, 2007 sectors, while those in retail have begun offering mobile coupons. American communications tend to favor striking colors and strong
This channel is effectively being driven by the hugely successful copy, more like adverts and direct response sales mechanics, result-
iPhone application platform. With over one billion iPhone applica- ing from having to stand out from a greater number of competitors
tion downloads to date, no program can ignore this medium. and more frequent messages.

continued on next page »

32 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 33

 Across the Ocean Blue (continued)

Differences in messaging/creative
Although the overall program structures are fundamentally the
same (partners, elite status, bonus points, membership cards, etc.),
there are some interesting distinctions between U.S. and European
travel programs:
European programs still require elite status to be earned through
activity. This is to protect the exclusivity of their earned benefits.
Another culturally required practice that has been unique to Eu-
10:10
Loyalty Trends for 2010
ropean programs (primarily British Airways) is ‘account pooling’, in-
spired by practices in the Middle East, in which multiple members of

Differences in Travel Program Elements by Robert Passikoff, Ph.D., Brand Keys, Inc.
Categories U.S. Europe

N
Redemptions Upgrades (automatic) One-way tickets iels Bohr once noted that “prediction is very difficult, especially about the future,” but then he didn’t have access to predictive loyalty
Gift cards Environment and metrics, which are leading indicators for behavior of the increasingly more-wily consumer. Consumers now have greater control over the brand and
charity marketing messages that enter their personal touch point zone; this is entirely changing consumer tendencies. Add to that a sea of brands where it’s hard to
Accruals Higher tier (executive) Revenue-based Another culturally required practice differentiate one from the next, and you see what we’re seeing now: category drivers—and the category and customer attributes and benefits, they consist
bonuses metrics of—are shifting like crazy. These “drivers” are critically important to understanding loyalty and engagement, and to getting it right when dealing with today’s
Program Rules No expiration of Baby break (status
that has been unique to European ‘bionic’ consumers. Properly configured, category drivers can tell you far more than just who a consumer is—a typical demographic and attitudinal point-of-
points/miles extension) programs is ‘account pooling,’ inspired view. These drivers tell you what consumers will actually do in the real marketplace. This matters if you’re keeping score by counting your sales and profits,
and not merely awareness levels or recommendations to friends.
Program Features Can buy elite status Account pooling
by practices in the Middle East. Having examined these measures in the Customer Loyalty Engagement Index (26,000 consumers assessing 440 brands in 63 categories), Brand Keys
offers trends for marketers in 2010 that will have direct consequences to the success—or failure—of next year’s branding and marketing efforts.

1) Value is the new black 6) Old tricks don’t work/won’t work

Loyalty programs in North America (primarily travel) are significantly
more generous with points/mileage crediting with open access to
masses of redemption inventory, while European programs tend to
reward strictly on transaction and revenue to avoid dilution and dis-
placement, especially on key routes that drive each carriers’ premium
revenues. In addition, American programs have eliminated point ex-
piration dates, while currencies of European programs tend to expire
after 2-3 years.
Free or discounted upgrades are seen as the most valued program
commodity in the US but are not as frequently offered in European
programs to protect premium revenue. Also, the US leads the way
in electronic gift cards for customer service issues or redemptions,
while Europe is working to close the gap across the prepaid market
given the commercial opportunities of both breakage and overspend.
The US programs are reaping the benefits of this. Conversely, awards
like one-way tickets, carbon offsets or charity donations are quite
common in socially and environmentally conscious Europe, but are
either new or have not yet found popularity in the US5, which could be
for opposing cultural reasons.
Finally there are differences in program rules that further reflect the
short term US versus longer term European view of customer relation-
ships. For example European programs such as Miles & More have a
benefit that is rare in the US. The ‘baby break’ (i.e. maternity leave),
allows new mothers with elite status to request a one-year extension
on their re-qualification. However, the ability to buy elite status is a
common practice in the US as a cash generative option, but larger
5
“The vast majority of [U.S.] members redeem awards for their own benefits”,
Colloquy, June 2009.
Predictions for 2010:
the household can collectively pool their points, benefiting families
especially those with more than one wife. To date this household ap-
proach has not yet been adopted widely in America as it does require
policing, by using one mailing address to ensure there is no pooling
of miles by corporate accounts resulting in a disastrous change in
mileage breakage rates.
Customer relationship results
In summary, both markets are rather mature in program develop-
ment and market penetration, with the US having a more competitive
background and environment leading to both innovation and a rela-
tively short-termist view on their customer relationships. In Europe
however, brands have implemented programs as a way of gathering
customer data for better business decision making and the ability to
better understand and meet customer needs in the future. Therefore
programs in Europe need to offer benefits at just the lowest cost of
customer self identification, often not so competitively.
Over time, primarily through the proliferation of global programs,
as well as web 2.0 and social media sharing information across cus-
tomer groups, the gaps will continue to close. Cultural differences
between customer sets will remain, due to Europe’s greater com-
plexity in geodemographic segmentation and the need to tailor an
approach based on languages, cultures and countries.
Loyalty programs which have been properly designed to support
corporate strategy and are executed according to market culture,
customer needs, and value, will continue to play an integral part
in driving company performance and success on both sides of the
ocean for many years to come. L
Excessive spending, even on sale items, will continue to be
replaced by a reason-to-buy at all. This is trouble for brands
with no authentic meaning, whether high-end or low.
2) Brands increasingly a surrogate for “value”
What makes goods and services valuable will increasingly be
what’s wrapped up in the brand and what it stands for. Why
J Crew instead of The Gap? J Crew stands for a new era in
careful chic—being smart and stylish. And the first family’s
support of the brand doesn’t hurt either.
3) Brand Differentiation is Brand Value
The unique meaning of a brand will increase in importance
as generic features continue to plague the brand landscape.
Awareness as a meaningful market force has long been obso-
lete, and differentiation will be critical for success—meaning
sales and profitability.
4) “Because I Said So” is so over
Brand values can be established as a brand identity, but they
must believably exist in the mind of the consumer. A brand
can’t just say it stands for something and make it so. The con-
sumer will decide, making it more important than ever for a
brand to have measures of authenticity that will aid in brand
differentiation and consumer engagement.
5) Consumer expectations are growing
Brands are barely keeping up with loyalty expectations now.
Every day consumers adopt and devour the latest technolo-
gies and innovations, and only hunger for more. Smarter
marketers will identify and capitalize on unmet expectations.
Those brands that understand where the strongest expecta-
tions exist will be the brands that survive—and prosper.
In case your brand didn’t get the memo, here it is: consumers are on to brands trying
to play their emotions for profit. In the wake of the financial debacle of this past year,
people are more aware then ever of the hollowness of bank ads that claim “we’re all
in this together” when those same banks have rescinded their credit and turned their
retirement plan into case studies. The same is true for insincere celebrity pairings: think
Seinfeld & Microsoft or Tiger Woods & Buick. Celebrity values and brand values need
to be in concert, like Tiger Woods & Accenture. That’s authenticity.
7) They won’t need to know you to love you
As the buying space becomes even more online-driven and international (and uncon-
trolled by brands and corporations), front-end awareness will become less important.
A brand with the right street cred can go viral in days, with awareness following, not
leading, the conversation. After all, everybody knows GM, but nobody’s buying the cars.
8) It’s not just buzz
Conversation and community is all. Ebay, for example, thrives on consumer feedback.
If consumers trust the community, they will extend trust to the brand. Not just word of
mouth, but the right word of mouth within the community. This means the coming of a
new era of customer care.
9) They’re talking to each other before talking to the brand
Social Networking and exchange of information outside of the brand space will increase.
Look for more websites using Facebook Connect to share information with friends from
those sites. More companies will become members of Linkedin. Twitter users will spend
more money on the Internet than those who don’t tweet.
10) Loyalty & engagement are not a fad; They’re the way today’s
consumers do business
Marketers will come to accept that there are four engagement methods including Plat-
form (TV/online), Context (Program/webpage), Message (Ad/Communication), and
Experience (Store/Event). But there is only one objective for the future: Brand Engage-
ment. Marketers will continue to realize that attaining real brand engagement is impos-
sible using out-dated attitudinal models. The watchword is “loyalty.”

2010 1.The winners in social and new media will be those who are willing to try and fail, not those who fail to try.
The future may not be what it used to be, but marketers that have loyalty and engagement metrics in place will have a handle on the trends that are
2.Brands who haven’t refocused on core differentiation strategy will struggle to compete in this increas-
going to show up in their offices. Accommodating these trends will require a paradigm change on the parts of some companies. But, whether a brand
ingly aggressive market. does something about it or not, the future is where it’s going to spend the rest of its life. How long that life is up to the brand, determined by how it
3.At least two new major players in the loyalty space will emerge from new market entrants and innovative responds to today’s reality. L
business models.

34 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 35

 Dare to be different!

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 FEATURES
THE CONFLUENCE OF
Data, Dollars
and Desires
by Nicole Nunn Walker, Metrosplash Systems Group
N ow more than ever, there is need for marketing account-
ability, to maximize ROI by investing in programs that quickly and
measurably influence consumer behavior at the lowest possible cost. Add
to this the need for programs that give consumers a reason to look be-
yond price when making a choice, and which bring them back on a regu-
lar, even habitual basis.
To create consumer influence or “confluence” it is essential to look at
what the consumer wants or desires. To identify a consumer desire is
to understand what influences their behavior. At the convergence of a
marketing plan influencing consumer behavior stands a well executed
loyalty program with a truly desirable reward for the consumer.
There have long been loyalty programs with incentives that reward con-
sumer behavior at the retailer level: retention, frequency and total spend.
Obviously retailers like the Grocery and Supermarket channel are lead-
ers at this practice. The travel industry service providers like airlines,
hotels and rental cars have also seen great success in rewarding the loyal
behavior from their consumer.
38 Loyalty Management™ • LOYALTY360.ORG
The supplier is typically very motivated to create
brand loyalty and rely heavily on investing in di-
rect marketing techniques like coupons, direct mail
and advertising. The suppliers often offer market-
ing development funds (MDF) to the retail chan-
nel in support of brand promotion, but are given
very little visibility as to the effectiveness of those
funds and limited correlation metrics around MDF
investment and product/brand movement. The re-
porting that is available tends to be manual/paper-
based and somewhat subjective.
With the sophistication of supply chain manage-
ment technology today and the landfill of loyalty/
transaction data that is being captured there is an
opportunity for the two channels, supplier and re-
tailer, to collaborate on better promotions that ac-
tually influence the consumer and create sales lift
for both channels. The term of confluence is also ap-
propriate in this concept: streams of disparate data
flowing together to provide meaningful trends and
analysis. Confluence by definition means a place
where things merge or flow together. To converge
promotional spend data with loyalty data and fi-
nally supply-chain management data both the Sup-
plier and Retailer can speak the same language and
optimize performance for profitability of the brand
and the merchant outlet. Other industry luminaries
have referred to this notion as collaborative com-
merce, a true collaborative transaction between the
Manufacturer, the Retailer and the Consumer.
From the consumer perspective, if the Supplier
and Retailer use the data provided to them by the
consumer (transactions) to both anticipate their
desires and reward their behavior, they will create
The question is: Has the Manufacturer or the Brand been repre-
sented in the process of rewarding the consumer and ultimately
an undeniably devoted customer: loyalty again for
both the brand and the retail outlet.
influencing their purchasing behavior?
There are a handful of super brands like Coca-Cola with mycoke®
rewards who have ventured into the arena of supplier-level or brand-lev-
el loyalty but for the most part this is unchartered territory. The brands
are heavily dependent on the retail channel to entice the consumer to-
wards their brands obviously subsidizing them with trade and promo-
tional dollars.
The retailers or merchants have a rich-source of data coming from their
Point-of-Sale systems and loyalty programs that when analyzed properly
can tell a very diagnostic story about which consumer is buying what
and why. This insightful data is typically analyzed and used for promo-
tion planning only at the retailer level. Very rarely is this data shared
with the supplier or offered as reference point for collaborative reward
funding that can truly influence the consumer’s buying behavior for a
specific brand.
Financial institutions have been doing this type of
transaction analysis with their payment processors
and rewards programs for nearly a decade. Trans-
actions are their business and they study consumer
transaction trends carefully. For the supplier, mov-
ing products is their business and they study sup-
ply-chain management techniques carefully. The
supplier now has the opportunity to evolve to the
next level of analytics by harvesting trends from
retailer-level data and investing MDF in hyper-tar-
geted promotions that move their products specifi-
cally.
One very tangible example of this confluence in
action is when P&G collaborates with a grocery
retailer to fund a very specific fuel reward promo-
tion around a specific market basket of P&G brands.
Nothing has proven to have a stronger influence on
the grocery shopper than fuel rewards (cents-per-
gallon discounts). Consumers are acutely aware of
fuel prices and will drive well out of their way to
save a penny or two per gallon. P&G has acknowl-
edged the consumer’s desire (lower gas price) and
promoted their brands in a highly visible way (fuel
discounts) to move more product (SKU-level sales
lift). Meanwhile, the retailer has used the fuel re-
2010
ward as a “token” in their own sticky loyalty sche-
ma. Win, win, win for the Consumer, the Supplier
and the Retailer. 2010 predictions
While the big-box retailers appear to be the obvious One-way websites
choice for rich transaction and loyalty data there is
an untapped conduit of this meaningful data in the will become obsolete.
convenience-store (C-store) channel. The c-store
More and more,
retailer interacts more frequently with the cus-
tomer and typically carries the top high-movers of companies will create
a Supplier’s brand at even a convenience price. Sup-
pliers should consider a collaborative commerce
websites that operate
model with a confluence of the data, desires and in two directions
dollars transacted in the c-store channel now ap-
proaching 148k outlets in the United States. L with chat and status
update functionality.
One very tangible example
of this confluence in action is
when P&G collaborates with
a grocery retailer to fund
a very specific fuel reward
promotion around a specific
market basket of P&G brands.
Loyalty Management™ • WINTER 2010 39
 FEATURES
Keeping Up in a Down Economy
by Bob Nelson, Ph.D., Nelson Motivation, Inc.
R ecessionary time can be very scary. Stories of
economic woes fill the headlines, but the real toll
of the recession is its impact on everyday people: those
who have lost their jobs, benefits or wages—and those
who are concerned about losing these things, which in-
cludes most everybody else.
Tight economic times bring more stress, anxiety and
fear to all employees, which, if left unchecked, create
a negative work environment that leads to declining
morale, eroding trust and loss of productivity for the
company. A recent survey by Quantum Workplace, a
company that tracks employee engagement scores of
over 1.5 million employees within 5,000 companies
nationwide, found that 66 percent of the firms report a
decrease in employee engagement that appears to be
in direct response to the negative circumstances of the
recent recession.
According to Peter Capelli, a professor of manage-
ment at Wharton, “Workers in a downturn can get so
nervous that they just freeze up and aren’t able to do
good work, especially if they’re afraid of being laid off
and it’s not clear what the standards are.” The key, then,
is to focus on the right things that help to motivate your
workers to improved performance, and overcome their
inherent fears.
Just what are these “right” things? To answer this
question, I examined employee motivation research I
have conducted with variances in management prac-
tices of those companies whose employee engagement
scores have increased during the current recession,
compared with organizations whose scores nosedived
over a comparable period. Based on this research, I
identified six clear dimensions that any manager or or-
ganization can implement to create a more motivating
work environment for their employees today:
•Create a Clear and Compelling Direction
•Direct, Open and Honest Communication
•Involve Employees and Encourage Initiative
•Increase Employee Autonomy, Flexibility
and Support
•Continued Focus on Career Growth and
Development
•Recognize and Reward High Performance
40 Loyalty Management™ • LOYALTY360.ORG
1.
Create a Clear and Compelling Direction
The starting point of any organizational change is setting a clear and compelling
vision for the organization. If employees are not inspired by what the organization
is trying to do, it will be more difficult for them to have the motivation and direction
to succeed—especially in tough times. Frances Hesselbein, President of Leader-to-
Leader Foundation, once put it this way, “No matter what business you’re in, every-
one in the organization needs to know why.” Do a reality check and ask employees
what the mission and purpose of the organization is. If you get a different answer
from each person you ask, it’s a good indication that things have drifted, or perhaps
have not been clear for some time.
It’s critical to be honest with employees. Doing
so will almost always lead to an increase in
teamwork, respect and dedication.
2. Direct Open and Honest Communication
Communicating opening and honestly was the top-reported employee motivator,
cited by 95 percent of employees as the variable they most wanted—and needed—at
work to do a good job.
Everyone needs to have answers to their questions and adequate information
about their jobs, as well as information about what’s going on in other parts of the
organization, new products and services, and the organization’s strategies for suc-
cess. Even when the firm is struggling, it’s critical to be honest with employees. Do-
ing so will almost always lead to an increase in teamwork, respect and dedication,
especially if delivery the of the bad news is also used as an opportunity to brainstorm
and communicate with employees about ideas and plans for turning things around.
3. Involve Employees and Encourage Initiative
Giving employees explicit permission to act in the organization’s behalf whether
that is through idea suggestions, problem solving, exceptional customer service, or
a host of other possibilities is also very motivating. My research found 92 percent
of employees feel it is important for managers to ask for their opinions and ideas at
work, and 89 percent feel it is important for their managers to involve them when
making decisions at work.
As Martin Edelston, chairman and CEO of Boardroom, says, “Sometimes the
best idea can come from the newest, least experienced person on your staff.” Like
the hourly paid shipping clerk who suggested that the company trim the paper size
of one of its books in order to get under the 4-pound rate and save some postage.
Boardroom made the change and did indeed save some postage: $500 million the
first year and several years since. Explains Edelston, “I had been working in mail-
order for over 20 years and never realized there was a 4-pound shipping rate. But the
person who was doing the job knew it, as do most employees know how their jobs
can be improved.”
4. Increase Employee Autonomy, Flexibility and Support
Once employees have been enlisted to get involved and make suggestions and
improvements, they need to be encouraged to run with their ideas, take responsi-
bility, and champion those ideas through to closure and completion. My research Proven Ways to Support
revealed that “autonomy and authority” and “flexibility of working hours” were
Employees in Difficult Times
marked as being important by 89 percent and 85 percent of employees, respec-
tively. To the extent that managers and the organization are able to provide these
motivators for employees, it can greatly impact their morale and performance in
•Include employees in the decision
having them do their best work possible. making process, especially as it relates
No one likes to be micromanaged. Employees prefer to be assigned a task and to their roles and responsibilities
allowed the freedom to develop a work plan that suits them. Roles and responsibili-
ties may be previously defined, but a job varies with the individual who occupies the •Encourage employees to develop
position. Here is where truly knowing your employees becomes important: under- existing skills and provide ample
standing their strengths and weaknesses allows a manager to best assign projects opportunities for career development
and tasks in a more meaningful way. Take it a step further by allowing employees to
pick and choose the projects and responsibilities on which they would like to work. •Identify employees who show the
most promise as leaders and offer
5. Continued Focus on Career Growth and Development
On first glance, it may not seem like employee learning and development should
them the chance to participate in
be a priority during tough times. After all, if things are tight, does the organization leadership training and development
really have the money, resources and time to spend on helping employees learn and
•Establish policies that allow
grow? Shouldn’t employees instead be focused just on keeping their jobs instead of
developing new skills? employees flexibility in their schedules,
But, there is no better time than a downturn to help employees learn new skills and let them work directly with their
and new ways to contribute to the organization’s success. Taking an action-orient- managers to develop a plan that
ed approach in helping top performers further develop their skills and strengths
benefits them as well as the company
can help in bad times as well as good. In my research with employees, management
support of employees who want to learn new skills was one of the top motivators— •Develop company-wide healthy living
reported by 90 percent of employees as being important to them. Since all devel- programs that promote a healthy
opment is essentially self development, providing opportunities for employees to
learn and grow benefits both them and the organization.
lifestyle such as fitness, nutrition, and
mental well-being
6. Recognize and Reward High Performance
The most significant driver of desired behavior and performance known to man-
kind is the notion that “you get what you reward.” As a manager in any organiza-
tion you will get more of the desired behavior and performance you want from your
employees by taking the time to notice, recognize and reward them when they excel Predictions for 2010
in their work. 2010
In my research I’ve found that it’s almost universal that today’s employees want •Unemployment will
and expect to be recognized when they do good work, although only 12 percent
continue to be at a record high through
report that they are consistently recognized in ways that are important to them and
85 percent of employees say they feel over worked and under-appreciated where mid-2011
they work today. What is the best way to motivate employees in tough times? Sur-
•Workplace stress will continue to
veys, studies and discussions with employees from all industries have revealed a
very simple formula for successfully rewarding employees: Treat your employees
increase and employees will become
with respect, pay them fairly, and notice, recognize and reward them when they do a numb and fatigued at the ongoing
good job. Sure, money is a motivator, but it is not the only motivator and it does have demands of their jobs
its limitations. Often, simple, creative, no-cost ways to show your appreciation in a
timely way can have a larger impact on your employees in making them feel special •Employer interest in employee
and motivating them to rise to the occasion in difficult times. motivation and engagement will
There are many circumstances managers cannot control, but there are many increase as employers become more
more they can directly impact in positive ways. By focusing on those things that
concerned with retaining their best
can be controlled, managers can help buffer employees from the negative impact
of the economy and help them focus their energies to achieve better results. While workers
none of us can individually change economic conditions, all of us can decide how we
react to poor economic times and focus our efforts in specific ways that can have a
positive impact where we work. In so doing, we can create a more positive and pro-
ductive work environment that will help your company thrive in challenging times. L
Loyalty Management™ • WINTER 2010 41
 TECHNOLOGY, TRENDS & REWARDS
2010 Rewards Trends
Variable Rate Rewards
2009 Results Validate Variable Rate Rewards
by James C. Purdy, Bridge2 Solutions, Inc.
During 2009 the face of business and the entire financial structure of the U.S.
and the world changed. What remained constant was the need to retain loyalty from
employees, and customers and reward them for certain positive quantifiable business
actions. Adapting to the ever growing pressure to retain loyal customers while reducing
cost, Variable Rate Rewards have proven to deliver new results for our new world.
Variable Rate Rewards allow the sponsoring
organization to provide reward pricing to cus-
tomers calculated in real-time by category-spe-
cific formulas. This practice gives the sponsor
the benefit of real-time price drops while en-
suring an expected ROI, regardless of the cur-
rent item price. Variable Rate Reward systems
integrate directly with best-in-class inventory
and fulfillment databases to provide millions of
reward choices and the most current models at
current prices.
Combining the benefits of the Variable Rate
Reward systems with active program manage-
ment, measurement and feedback produces
significant positive program results. This com-
bination creates a win/win for both program
sponsors and their customers/participants.
•Increased Program Engagement
•Participants have been measured to visit
the program site a multiple of 4-6 times
more frequently due to the ever chang-
ing inventory that mirrors the consumer
marketplace
•Redemption Mix Change
•Participant redemption has moved fa-
vorably towards merchandise given the
breadth of selection, ease of catalog navi-
gation/selection and quick fulfillment.
42 Loyalty Management™ • LOYALTY360.ORG
•Reward Value
•Real-time reward pricing allows the re-
ward price to fluctuate while retaining
the program sponsor’s ROI goals.
•Customer Satisfaction
•Leveraging world-class fulfillment orga-
nizations, participants can track reward
fulfillment and receive their rewards in
an average of 4-6 business days.
With such significant advantages in the reward
marketplace, you may be wondering if there
is truth to all the hype. Do participants really
want choice and does real-time pricing really
make a difference? A quick question to ask your-
self as a consumer, “Am I satisfied to look at 4 or
5 digital cameras, 5 or 6 TV’s, 3 kitchen mixers,
one set of bedding and overall a choice of only
hundreds of items when shopping for personal
‘wants’?” I offer some staggering statistics that
Bridge2 Solutions has monitored from redemp-
tion trends on our 400+ operating catalogs.
•As compared with a traditional merchandise
catalog of 1,000+ items, Bridge2 Solutions
will fulfill over 150,000 unique reward items
(SKU’s) in 2009, proving personal choice to
be a significant driver and differentiator in
loyalty programs
•In a six month period, top redeeming items
in the Bridge2 Solutions catalog decreased
in price by an average greater than 20%. Ad-
ditionally, within nine months, most of the
items had been discontinued and replaced
Business markets change and adapt to new
pressures, and currently Variable Rate Rewards
reflect the new standard for customer engage-
ment. As a silver lining to an otherwise tough
commercial year in 2009, watch for contin-
ued innovation, new products and emerging
services that reflect tomorrow’s new world of
business and consumer loyalty. Just as today’s
reward products change quickly, so will the
technology and services available for future
loyalty initiatives.
2010 promises to be an exciting year of new,
improved and remarkable solutions!
Travel
Travel Loyalty Program
Redemption Trends
by John Miller, Connexions Loyalty Travel Solutions
As airlines and hotel companies continue to seek incremental
revenue and create more value for their brands, they are unlocking
the value of their loyalty programs by expanding reward options for
their members and allowing them to redeem their loyalty miles/points
for ancillary travel products. Until recently, airline and hotel loyalty
programs have required members to go through a cumbersome process
to transfer their reward currency into another loyalty program in order
to redeem for an alternative travel product.
Through new technology these programs are able to provide travel
reward and purchase options similar to that of full service online travel
agencies (OTAs), with customizable branding to create a more compel-
ling reason to stay on the program’s website. Members no longer have to
transfer miles/points and then wait days or weeks for processing to be
completed before redeeming the transferred reward currency. By com-
bining full service online travel capabilities along with the flexibility to
use program currency to redeem a wider array of travel products, cus-
tomers gain additional value from their rewards program, resulting in
enhanced loyalty to the brand and commitment to the rewards program.
For example, in 2009 United Airlines began to allow Mileage Plus
members the option to redeem miles for hotel stays and rental cars on
the Mileage Plus site. Around that same time, Starwood Hotels provided
members the ability to redeem SPG Points for flights on the Starwood
site. These programs are unique because of the technology being used
to facilitate the redemption, which does not require transferring miles/
points to another program, but rather keeps the member experience on
the brand’s site while providing more robust redemption options. Now
members have the benefit and ease of using each program’s single cur-
rency to book flights and hotel stays on their own sites. This trend is also
seen in many bank card programs.
By combining full service online travel
capabilities along with the flexibility
to use program currency to redeem
a wider array of travel products,
customers gain additional value from
their rewards program.
By converting to a “points plus cash” model, programs can even fur-
ther increase the value of the brand’s website; offering the ability to add
a cash payment to offset any miles/points shortage. Points plus cash re-
demptions allow program members the ability to earn travel rewards
faster, and is a compelling reason for the customer to increase spend
with the program. More redemption options on a single website provide
a better customer experience and drives incremental revenue to the
brand’s own site instead of a third party’s site thus allowing the brand
to regain control of its inventory and gain valuable information about
program members.
The ancillary travel product redemption option along with the “points
plus cash” model are catching on with smart loyalty program managers
as they look for ways to increase the value proposition of both new and
mature customer loyalty programs.
continued on next page »
Loyalty Management™ • WINTER 2010 43
 2010 Rewards Trends (continued)
Prepaid
Distinguishing Loyalty
by Render Dahiya, Arroweye Solutions
I think we can all agree that 2009
was a turbulent year. But I believe the
story will read quite differently for the
prepaid card industry, which is fore-
casted to come out ahead amidst the
shakey economy. In fact, industry ex-
perts agree that the prepaid cards are in
a high growth category. And according
to Mercator Advisory Group, authors of
an annual prepaid market assessment,
this growth is attributed to “being in the
right channel with the right product.” I
couldn’t agree more, especially when it
comes to loyalty and incentive.
Making a Connection
Loyalty is personal. It’s rooted in
building affinity between companies
and each of their employees or custom-
ers—and building affinity is dependent
on consumers having a consistently posi-
tive experience with the brand at every
touch-point. This is true in the aisles of
an airliner, on the pages of a Web site
or through the experience of receiving
a plastic card as a reward. It’s clear that
prepaid cards can be an important part
of a company’s loyalty strategy—they can
reinforce a brand and establish long-term
relationships.
The economic woes
in 2009 remind us
that the programs
we invest in need to
be effective, but also
efficient and smart.
44 Loyalty Management™ • LOYALTY360.ORG
Loyalty, One Card At a Time
With the goal of increasing usage, marketers and loy-
alty providers are seeking new solutions, increased flex-
ibility and more customization to reinforce their brand.
They want differentiation, and a generic prepaid card
mailed in a windowed envelope just doesn’t cut it any-
more. Those who succeed in delivering a more personal
experience will likely come out ahead. We’re seeing more
companies looking to customize the images and designs
of cards, add their logos and distribute the programs
in a unique and branded card carrier. Why? To break
through the clutter and build a connection. Traditionally,
production methods and ordering processes have made
it cost-prohibitive to achieve this level of customization.
2010 is the year we recognize the possibilities and ef-
ficiencies of a digital on-demand prepaid card solution. A
digital environment means cards are produced as need-
ed, when needed, giving program managers the opportu-
nity to quickly respond to their customers. Technology is
available today to produce completely customized cards
within 24 hours. The beauty of this solution for the loy-
alty market is threefold. First, it allows loyalty managers
to tailor their card designs and carriers to be meaning-
ful to the recipient. Second, it simplifies and expedites
the process of getting a new program to market. Lastly, it
lowers inventory costs by eliminating spoilage and lim-
iting fulfillment expenses. The economic woes in 2009
remind us that the programs we invest in need to be ef-
fective, but also efficient and smart.
2010
On the Horizon for 2010
All signs point to continued
growth for the prepaid
market in 2010. Increasingly,
prepaid cards will become
a mainstream offering. As
more options are made
available to loyalty providers,
the more critical it will be
to tailor card programs
to stand out. Ultimately,
on-demand production is
a vehicle that makes this
possible.
Like every industry, there
will be winners and losers.
The companies that succeed
in the loyalty and incentive
space will be those that can
quickly respond to demand
and create a meaningful,
relevant connection with
their target.
2010
Concierge
Trends: Concierge viewed as strategic
marketing channel
by Michael Breault, Circles
There are two key trends that are impacting today’s
customer loyalty programs:
•Desire to further sub-segment customers in loyalty and
rewards programs. Driven by the need to balance increas-
ingly tighter marketing budgets with the need to be laser-
focused on retaining their “best” customers, companies
must continue to better understand the profiles of their
customers.
•Even greater focus on differentiation. Brands need to cut
through the “market clutter” and have their messages come
through clearly to their desired customer base. In this
tighter economic market, me-too loyalty programs will not
deliver the ROI companies need.
Fueled by these trends, brands are increasingly turning to
non-traditional marketing channels such as concierge to drive Through these conversations with customers and the
the permission-based, two-way dialogue through which they various levels on which they are serviced, concierge is also
can more fully engage their customers. uniquely able to help the brand sub-segment its customer
For the most part, companies have an understanding of base. Every interaction between concierge and the customer
their client base, but it is limited. The general demographic not only increases the relevance of the brand, but also builds a
and purchase behavior information (such as transactions, en- unique store of personal knowledge such as hobbies and pas-
rollments, response to direct marketing, satisfaction surveys) sions, likes and dislikes, important dates and milestones, and
they have is not enough to effectively guide them in forging business needs. This cache of customer information—infor-
strong, personal relationships with their customers. mation that’s very intimate, personal, and valuable—arms the
More and more brands are realizing, however, that interac- brand with the insights into individual behaviors, preferences
tions with concierge offer an incredible opportunity to cap- and patterns they need to sub-segment their customer base in
ture customer information they cannot capture in any other a meaningful way.
way, and that leveraging that information in real time deliv- At the same time, concierge can cross-sell smartly and de-
ers value to the customer and drives heightened engagement. liver key messages and information, test product ideas, etc. in
Because concierge is a powerful, interactive, and conversa- a lower cost, more dynamic fashion. No battling with clutter
tion-based marketing channel, there are direct and frequent or marketing overload. By knowing customer behavior and
interactions with customers as they rely on concierge to help preferences, concierge is uniquely positioned to talk directly
them with travel planning, individual and group dining, per-
sonal and business gifts, business meeting arrangements, etc.
Not only are we seeing that users of concierge are increasingly
to their customers in a unique and proactive way—delivering
targeted, relevant, value-add messages via an intelligent, per-
mission-based conversation.
accepting of information and offers delivered through this
channel, in fact, but that their satisfaction actually increases
And in the end, this ongoing dialogue and the value it pro-
vides to the customer, coupled with the leverageable customer
because they view these offers as personalized and relevant— insights it provides to the brand, drives engagement more
a welcome change from the barrage of typical marketing to effectively than traditional marketing ever can. And this en-
which they are subjected. gagement is what brands desperately need. L
Predictions & Trends 2010
•We will continue to see a customer-centric shift that is forcing organizations to rethink customer
engagement. Engagement is now about attention: Are your customers paying attention to what you have to
say? Are they interacting with you?
•How we evaluate the success of loyalty programs has evolved. Participation, and no longer membership, is
the metric: on average, people belong to 14.1 loyalty programs but participate in only 6.2 of them. Brands
need to be looking at redemption: Statistics show that someone who redeems is much more engaged than
someone who’s simply earning.
Loyalty Management™ • WINTER 2010 45
 TECHNOLOGY, TRENDS & REWARDS

2010
New Year Predictions:
•2010 will see at least a couple
of the nation’s largest banks
launch enterprise-wide rewards
EXPANDING THE UNIVERSE OF programs.

International Coalition •U.S. retailers will increase their

focus on data-driven marketing

Redemption Options
and loyalty, much like Tesco in
the U.K.

by James Watts, First Annapolis Loyalty

N Increasing competition
o matter the international market (from Canada and Europe to Asia), the goal of any successful coalition program
manager is to find the right balance between offering a compelling value proposition to the consumer and to the coalition program spon-
sor. From a consumer standpoint, as long as coalition is able to sign up sponsor merchants with significant market share, and offer a reasonable has caused coalitions to
value proposition in everyday spend categories, there should hypothetically be enough incentive to sustain a viable program. However, the mer-
chant side of the equation can be slightly more complicated. As a coalition program matures and markets change, coalition managers become appeal to broader consumer
increasingly reliant on the program’s sponsor merchants, and must find ways to demonstrate program effectiveness and value.
demands for a wider range of
In 2006 Payback, a German based To address this trend, coalition managers have been expanding redemption options.
the universe of redemption options for their programs. For example,
merchant coalition, reported that Air Miles has moved far away from its mantra “a travel mile is a Although a merchant redemption option seems
redemption for gift vouchers at mile,” a testament to a time when one Air Mile travel mile could
literally only be used to fly a mile on an airline like Air Canada. To-
like a win-win, many of the world’s largest coalitions
have yet to implement a merchant redemption op-
sponsors accounted for over 70% of day, an Air Miles cardholder can redeem for gift cards (which are tion. For example, Air Miles Canada started offering
redemption activity in the program. primarily sponsor branded), merchandise, experiences, and travel
rewards. In 2006 Payback, a German based merchant coalition, re-
the option in 2006 and Air Miles U.K. still relies exclusively on
Illustrative Cost per Point Impact of the Integration of a air redemption.
ported that redemption for gift vouchers at sponsors accounted for
This issue is compounded by the fact that many sponsor mer- Sponsor Gift Card Redemption Option Increased competition and decreased reliance on key pro-
over 70% of redemption activity in the program.
chants in coalition markets are facing international price-based gram sponsors will continue to shape the direction of coalition
Merchant contractual cost per point $0.0150
competition. For example, in 1993 when Safeway became Air Miles This expansion in redemption options not only creates a stron- rewards program. Vanilla rewards programs such as Air Miles
Canada’s exclusive Western Canadian grocery store program spon- ger value proposition for sponsoring merchants, but also acts as a Discount given on gift card by merchant $0.0010 Canada circa 1993 are quickly becoming a thing of the past as
sor, the company had over 30% market share in country. As the key differentiator. Increasing competition has caused coalitions to Merchant breakage on gift card (15%) ($0.0015) coalition programs are continually evolving to strike a balance
competitive landscape evolved, the grocery store chain quickly appeal to broader consumer demands for a wider range of redemp- between a strong consumer and merchant value proposition.
Redemption margin (25%) ($0.0025)
saw its market share erode to big box retailers like Costco, a com- tion options. Payback, which reports almost 60 million members, While true coalition programs are currently isolated to cer-
competes against other coalitions within Germany that cumula-
New effective cost per point $0.0120
pany that operates with scale and slightly thinner margins. Safeway tain regions of the globe, the changes being made abroad to
tively claim similar member totals.
(25% decrease)
Canada’s market share in Western Canada is now over 5% less than strengthen merchant value proposition may help to bring co-
Sources: First Annapolis Analysis of coalition investor materials & conference material
when the alliance was formed. alitions closer to feasibility in other parts of the world. L

46 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 47

 TECHNOLOGY, TRENDS & REWARDS

Best Practice in 2010: Global Engagement
Today, the World’s biggest loyalty programs can be
found in the airline, hotel and financial services indus-
tries. Most of them manage global member bases but
face difficulties in engaging them across the globe. No
doubt, these programs lose out on hundreds of millions
of points-sales revenue and probably spend too much
money building an infrastructure that ultimately only
delivers a ‘quasi-global experience’ to their program
Both technologies are delivered by specialized ‘earn’ or
‘burn’ solution providers. In terms of future ‘Technology’ we
should certainly expect the convergence of global earn and
burn technologies.
Trend in 2010: iPhone Apps
There is no doubt that the best way to reach global affluent
consumers, i.e. members of the leading frequent flyer, frequent
guest and frequent buyer programs, is through their mobile
phone. It’s always in a traveler’s pocket and it is the most acces-

Globiphonization
members.
sible, most social communication channel. But so far, the mo-
Future ‘Best Practice’ will go to global loyalty pro-
bile communication channel has not been fully exploited by the
grams that deliver local experiences globally.
loyalty programs. The thing that changed last year is that Apple
LOYALTY AFTER THE ECONOMIC DOWNTURN Technology in 2010: Earn- discovered the holy grail of
by Dominic Hofer, Loylogic, Inc. Burn Convergence mobile usability, and imple-
Key to the success of any All these applications are mented it in the iPhone.
loyalty program are the ‘Re-
wards’ that it offers. Over the
fully controlled by Apple and Today, every user needs
one and every company
last couple of years, the fi- exclusively available to iPhone needs to be on the AppStore.

W
hile 2009 was the expected challenging year By the time this article is
for many companies and industries, we also find
nancial services industry has
successfully demonstrated
customers. That, for sure, is published, Apple will offer
some winners; one of them definitely being the loyalty in-
dustry. Over the last couple of months, many companies
that affluent cardholders can pretty powerful. Imagine if more than 100,000 iPhone
be lured away from airline applications and we will
stress-tested their existing loyalty programs and learned What didn’t work in 2009: Frequent Flyer Program Spin-offs
co-brand credit cards when Microsoft invented the internet probably use ‘iPhoogle’ to
There is no need to spend many more words about the very suc-
that they have a great tool at hand to navigate through eco-
nomic downturns. cessful spin-off of Aeroplan from Air Canada back in 2005. Even if
offered valuable and liquid
points currencies together
and would have controlled navigate through the App-
Store jungle.
For 2010 we can surely expect some major technology the Aeroplan share price got hit hard, the FFP spin-off model re-
mains a success. It even proved again its value to Air Canada when
with large selections of rel- paid distribution and access to So there is no doubt that
initiatives from the loyalty industry. Going ‘global’ and go- in 2010 we will see the first
ing ‘iPhone’ will lead the way. Are you ready to ‘globipho- the program ‘accelerated’ CAD 70 million to buy reward tickets back
evant rewards. Most of these
programs are based on a new
websites. loyalty program launching
nize’ your loyalty program? in December 2008 and issued another loan of CAD 100 million on an iPhone application that
breed of reward solution that
June 29, 2009.
What worked in 2009: The Economic Downturn However, where is the next
Tesco’s CEO Terry Leahy is completely e-commerce based. covers all relevant loyalty processes to its members. From ac-
Equally successful are the so called ‘Merchant Funded cessing their point balance to actually redeeming their points
Loyalty winners in 2009 came from loyalty programs airline spin-off? Weren’t we also revealed that its Reward Malls’, offered primarily in the travel and finan- from wherever they are located, this will be a big step forward
that carefully studied the impact of the economic crisis on all leaning across the Pacific offer of double points cial services sector. These solutions integrate with hun- in providing a mobile channel that is powerful for both pro-
their members’ household budgets. to follow the development of
A very good example of this is (again) Tesco Clubcard. In the previously announced Qa-
on the Clubcard loyalty dreds of leading online merchants through a number of gram sponsor and program member alike.
affiliate networks and provide loyalty program members Loyalty programs that lead the way in 2010 will develop
May 2009, Tesco re-launched Clubcard in the UK, includ- ntas Frequent Flyer spin-off? scheme had improved its an opportunity to earn points while shopping online. iPhone-based, global points earn and burn solutions to reach
ing £150 million worth of investment, with the aim to add Well, it won’t happen. On Au- performance amidst the out to their members—‘Globiphonization’. L
another 1 million members to the program. The objective gust 7, Qantas CEO Alan Joyce
was met on October 12, when Clubcard added the 16-mil- said that “Qantas will be post-
recession.
lionth UK member. Shortly after, Tesco’s CEO Terry Leahy poning the spin-off of its Frequent Flyer program indefinitely”.
also revealed that its offer of double points on the Clubcard Why has no airline followed the successful model of Aeroplan?
2010 predictions
loyalty scheme had improved its performance amidst the Why does Groupe Aeroplan not succeed in acquiring another Fre-
2010
recession. quent Flyer Program? Well, Alan Joyce made another statement on Future ‘Best Practice’ will go to global loyalty programs that deliver local
Smart marketers quickly re-worked their reward portfo- August 19, 2009: “Given the strategic value of Qantas Frequent Flyer
lios and showed their members how valuable their loyalty to the Group, we will be retaining full ownership for the foreseeable
experiences globally.
points can be; especially when times get harder for fami- future.” Maybe airlines should keep close hold of their most valuable In terms of future ‘Technology’ we should certainly expect the
lies. In September 2009, American Express introduced op- assets—their ‘affluent frequent flyer customers’—and gather as many
tions to redeem Membership Rewards points for everyday earn partners around the program to provide cash advances when convergence of global earn and burn technologies.
charges such as groceries, gas, phone, wireless and cable needed. An example comes from December 9, 2008: “Delta will re-
bills. Other examples can be found within the airline indus- ceive an immediate $1 billion boost to its liquidity from a purchase of
Loyalty programs that lead the way in 2010 will develop iPhone-based,
try, where airlines such as Delta, Alaska Airlines, TACA and SkyMiles that American Express will use in part for its membership global points earn and burn solutions to reach out to their members—
many more dealt with overcapacity by adding additional re- rewards program. Delta said it expects to receive an additional $1 ‘Globiphonization’.
ward seat capacity or offering one-way reward flights. billion from contract improvements through 2010.”

48 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 49

 TECHNOLOGY, TRENDS & REWARDS

2010
The Year You Invest in Social Media
While many companies
are taking this first step
by Jared Stivers, Walker+Stivers Analytics
they often miss
one important concept:
You’ve most likely heard all the buzzwords surrounding social media: Tweeting, Facebook Fans, Mommy bloggers social media is a conversation
and the like. In fact, many of you are probably fairly well versed in social media in your private lives. Anyone
who has posted a photo on Flickr, set up a Facebook page or simply commented on a blog has contributed to the not a monologue.
social revolution. But despite the fact that even our parents are now setting up pages on Facebook, we have been
remarkably slow as marketers to take advantage of this new medium.

S The Basics
ocial media as a whole is hands down the
most cost effective tool in driving engage-
ment and influencing purchase decisions. If you
look at some of the most effective social mar-
keters today, their costs are often measured in
terms of an employee’s time. There is absolutely
no upfront cost in setting up a social presence,
there is no media to buy and even the most ad-
vanced practitioners dedicated only a fraction of
their marketing budget.
Given these facts it would seem only a mat-
ter of time before a corporate social presence is
given the place at the table it rightfully deserves.
But this is a good thing for forward looking com-
panies who see the inherent benefits in social
media rather than focusing on the potential
threats. The opportunity to carve out your space
ahead of the competition is right now, and here’s
how to do it.
Dell recently announced
it made $6.5 million in
sales due to Twitter with
the number of followers
increasing 23% in the last
three months alone.
The first thing to do, if you haven’t already, is get a basic corporate presence set up. A
good starting point is to create a Facebook Fan page, sign up for a Twitter account and
create a corporate blog where you can interact with your customers. Let’s take a look
at those one by one.
Facebook Fan pages are free, feature-rich and allow you to become part of your
customers’ personal day to day lives in the way no other medium can. These pages
are exceptionally well suited for B2C businesses as people often use their consump-
tion choices as a way to express themselves. While many companies are taking this
first step they often miss one important concept: social media is a conversation not a
monologue. Simply posting your marketing on a Fan page every so often is not taking
advantage of the true nature of social media. Good social marketers, such as Absolut
Vodka, capitalize on the intimate relationship this social network provides by offering
their fans exclusive deals and a sense of access to the brand. The result for Absolut is
over 500,000 fans: brand ambassadors waiting to hear from them and willing to spread
the word.
Twitter has evolved to become more than a way to simply express your thoughts in
140 characters or less, but a new communication channel between a company and its
customers. Like a Facebook fan page, a Twitter account is only good if you use it, but
it can go far beyond the occasional product announcement. Dell recently announced it
made $6.5 million in sales due to Twitter with the number of followers increasing 23%
in the last three months alone. And while that’s a small percentage of their overall global
revenue, the cost per sale from this particular social media channel has inspired Dell to
ramp up the investment.
The final basic component of a social media strategy is a corporate blog. Blogs allow
for a more conversational approach to speaking with prospects and customers as well
as facilitate a dialog in ways a corporate web site cannot. Taking this one step further
you will often see employees blogging in a public forum not directly related to the com-
pany they work for but rather the industry. One of my favorite bloggers, David Berkowitz,
writes excellent posts for the social media community which in turn positions his em-
ployer as an agency more than capable of guiding clients through the social landscape.
Let Your Employees Contribute
Having an expert blogger on your payroll is cer-
tainly a good thing, but you can also take advantage
of the social nature of your employees. Often time
companies will make the news for imposing draconi-
an measures that seek to avoid an embarrassing em-
ployee mistake in the social world by outright banning
the use of Twitter or other social channels. However,
most companies simply ignore social media and the
role that employees should be playing.
Those on the forefront however, create a social
media policy that outlines how the company should
be portrayed and encourages its workforce to go out
and spread the message. Awareness, preference and
purchase no longer follows a linear path from the cor-
porate marketing dept. to the potential customer but
rather the marketing funnel is now interconnected
touching prospects several places on the social web.
This is a good thing; forward looking companies are
taking advantage of these connections and using their
employees to grow the bottom line.
Hitting Your Numbers
In the end, the goal of social media is the same as
all of your marketing; build the brand and increase
sales. In order to effectively achieve these goals with-
out spinning your wheels it’s important to set goals
and periodically take stock of where you are. Like
most online marketing there is no lack of metrics in
the social sphere but directly attributing your online
presence to sales can get a little tricky.
2010
2010 Predictions
The best way to measure the contribution of your
social presence is to allow a customer to complete a
•Real time search will index
transaction directly from the social network. Cosmet-
ics giant Sephora has done an excellent job creating your facebook status updates
a Facebook community where it showcases special so quickly when that special
offers for its fans. One click gets you to the product someone changes their
page where each transaction can be attributed to relationship status to “single”
Facebook.
the rest of the world will know
For most of us, especially those with longer sales
about it before you do
cycles, it’s not that simple. This is where the brand
building aspect comes in. Continuing with the Face- •Your personal (facebook)
book example your best indicator of success is the and professional (LinkedIn)
number of Fans you have. With Twitter it’s the num- online personas will merge
ber of followers and also your “retweets” or how many and become one so don’t post
of your posts are passed along by other people. One
any status updates or cheeky
simple metric is to benchmark yourself against your
comments you wouldn’t
competitors; the number of Facebook Fans and Twit-
ter followers is prominently displayed for all the world want to see on the cover of a
to see. newspaper
•As Twitter becomes more
The Bottom Line
While social media is still a small part of most mar-
ubiquitous we will all speak
in sentences 140 characters
keting budgets the ROI provided from this channel
has gotten marketing managers to take notice. In- or less
•And one that I know will be
vesting in social media should be a no-brainer given
the direct impact on sales as well as the deep level of true: Google will replace
engagement provided by this medium. As we get bet-
ter at creating and nurturing conversations with our
Microsoft as the 800 pound
gorilla we all love to hate.
customers and prospects a well thought out and ex-
ecuted social presence can be the difference between
good companies and great companies. L

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 TECHNOLOGY, TRENDS & REWARDS

Mobile Applications
Advertising and
Marketing
It’s big, it’s great and it’s here.
by Amit Gupta, InMobi

M obile applications are a fast growing area in the mobile eco-

system and are a hot topic in most industry forums these days. Due
to their unique format and captive audience they offer a huge potential for
mobile marketing and advertising. In fact, it has become one of the pre-
ferred mode of mobile advertising for many brands and agencies for a lot
of reasons. Though the appeal of in-application advertising is manifold, be-
low are some of the aspects.
•The fundamental reason is that mobile applications can deliver a richer
and more compelling user experience than most other modes of mobile
advertising. As the phone capabilities start getting better, the feel of the ap-
plication also improves. For example, a game with motion sensors to move
in different directions is way more attractive than a game with button con-
trols. Hence as better phones begin to hit the market, more innovative apps
are developed that use the enhanced features of phones giving users a very
engaging experience. Hence, an increasing number of brands have begun to
sponsor an entire application and provide it for free for consumers creating
a big opportunity for brand awareness.
Advertisers are also looking at application advertising &
marketing as a way to gain consumer loyalty. In one example,
McDonalds had a way to track the number of burgers bought
through the consumer’s mobile phone and every 10 burgers
would entitle the consumer to 1 free burger. We have indeed
witnessed a rising number of advertisers focusing on loyalty
management. But it has to be kept in mind that this needs a lot
of thought in terms of incentives, initiatives, procedure, man-
agement etc. So far, we have only witnessed some of the more
mature brands going in for mobile form of loyalty management.
An increasing number of brands have begun
to sponsor and entire application and
provide it for free for consumers creating a
big opportunity for brand awareness.

•The applications on mobile phones can avail all the mobile phone features
such as the camera, GPS, media player or 3D graphics. If ad campaigns are
designed to effectively utilize the mobile phone capabilities, then it can
lead to very engaging and successful ads. For example, since most phones
come with GPS capabilities, the ads could make use of the location based
information.
•Applications that provide value to the user, usually stay on the users phone
and potentially bring in a viral effect. Moreover, if the application is design
such that it does not need to be connected to the internet, then it can also
be used when the users are offline. This shoots up the amount of usage of
the application, in turn resulting in more impact of the brand to the user.
Some of the brands that use applications in this category are Zippo, Dock-
ers, Branded Games etc.
For brands that already have a loyalty program in place, it is
just a matter of developing mobile applications so as to phase
out the use of membership cards and other forms of identity and
integrate it all into 1 device—the mobile. We have seen that the
mobile phones are being used for more and more applications
reducing the number of other devices needed. Phones now do
the job of a music player, a watch, camera, radio, computer and
many other applications. It is just a matter of time until mobile
phones become an instrument of identity. Loyalty management
through mobile phones is still in its nascent stage and brands
that are investing in it now are enjoying the benefits of being
first in the trade. L

New Year Predictions:

2010 1.Usage of internet via smart phones in the eastern world will grow exponentially and will begin to catch up
with the west.
2.mCommerce will see a higher levels of adoption and emphasis will be given to the user experience
creating a seamless experience on mobile payments.
3.Location-based services will be the need of the hour resulting in increased penetration of GPS-enabled
phones as well as phones with superior geo-tagging technology.

52 Loyalty Management™ • LOYALTY360.ORG

 BEST BUSINESS PRACTICES

S2H REPLAY
The S2H REPLAY rewards
people for being physically

Loyalty
active (running, playing
sports, dancing, etc) by
measuring the amount of activity done over a period of time (see www.s2h.com). Currently each
60 minutes of activity generates a unique reward code which can be uploaded to a micro-site to

Innovation
accumulate points.
These points can be used towards gaining rewards (free movie tickets, DVDs, sports equipment,
MP3s etc), and on S2H.com, they can be used for challenges to other users (i.e. parents challenge
children; friends challenge friends; teachers challenge students), play games or used to improve the
look of a user’s online avatar.
PRODUCTS, Businesses in pharma, healthcare, insurance, sports, education, retail and more can benefit from
customizing this promotional product, distributing this to their customers or employees and gain by:
ADVANCEMENTS, •building valuable and unique brand awareness and loyalty

& TECHNOLOGIES •rewarding their customers and employees for their physical activity
•distinguishing themselves as a promoter of healthy living
FOR 2010 •driving traffic to their website & collecting valuable customer data

OfferIQ
Partnership—now possible between instore
merchants and loyalty and affinity programs
OfferIQ’s Patent Pending proprietary Virtual In-
centive Platform (VIP)™ bridges the gap for successful partnerships between retailers and
card loyalty and affinity programs. Retailers can now tap these relationships to effectively
target different and unique offerings to potential new customers and existing ones.
Plus, consumers can now recognize the redemption of the offer at point of sale without
any point of sale hardware or software adjustment at all! OfferIQ brings mobile coupon
delivery and redemption to the physical shopping world.
With OfferIQ, any retailer (regardless of size) is armed
with the cost-effective, turnkey solution needed to create
Creditz gives
an immediate, repeating, and strengthening interactive
cycle of offers and rewards with their customers. Through
consumers digitalized
OfferIQ’s embedded technology, retailers will effectively cash they can redeem at
gain a competitive edge by:
Creditz The pilots being undertaken by Bling Nation in North America are definitely
Is the US
ready for a
worth looking out for with the integration of loyalty & payments using mobile
new digital & rfid technologies.
currency? —Upendra Namburi, loyaltyredefined.blogspot.com
The Creditz system was designed to offer merchants
the power to build relationships while motivating consum-
ers to stay loyal to specific establishments, increase visits
Convego Air Mobile Bling Nation
G&D unveiled a completely new form factor for debit cards. Con- Bling Nation® is a payments network provider for com-
and spend more. Sophisticated technology was developed
vego Air Mobile is a sticker which enables the user to pay contact- munity banks nationwide. Bling Nation enables financial
based on listening to the customer—re-
lessly. institutions to more profitably support payments be-
tailers and their customers.
The sticker contains the full functionality of a credit or debit card. tween their local demand deposit accounts (DDA) and
Utilizing IBM's latest db2 database and
Series I infrastructure technology, the
Once the thin and pliable foil has been affixed to a cellphone or
PDA, the device can be used to pay bills at all cash terminals and
merchant account holders by bypassing the current debit payment model.
Bling Nation’s Community Payments Service enables banks to convert potential
Creditz system allows merchants to of-
fer their customers general and targeted
ticket machines supporting the worldwide contactless MasterCard on-us debit transactions to actual on-us transactions by offering merchants and
PayPass standard. consumers secure, contactless payments at the point of sale. Customers tap their
offerings. Merchants are now able to of-

•Offering customers special, relevant, targeted offers in

any Creditz merchant;
real-time instant digital cash,
•Easily and inexpensively targeting customers based on
individual behavior, preferences, location and buying pat- instant ability to spend
terns
•Setting offer parameters based on customer segments and profiles
•Sending offers via email or location based mobile
•Analyzing each offer and offer segment using a flexible, online reporting dashboard
•Creating virtual “frequent shopper programs” to reward loyal customers.
•Gaining new customers driven by OfferIQ’s issuer/bank partners and consumer
aggregators
No POS changes. No associate training. And easy for your customer.
Find more at www.offeriq.com
fer personalized promotions by customer
The Convego Air Mobile sticker is an important transitional mobile phones on the contactless reader installed at the point of sale at local mer-
technology on the way to contactless payment transactions by cell- chants in the network. After every successful transaction, customers receive instant
value, customer segment or by customer
preference and receive these offers online
phone. Current terminal infrastructure limitations present a clear payment confirmation via SMS text message to their mobile phone, which includes
barrier to NFC and require targeted investment by MasterCard. A their current bank account balance.
via email, laser targeted mailings, or wire-
less personal devices.
key factor to trigger investment is consumer acceptance of NFC, PCI compliant, Bling Nation provides a secure payment network that significantly
and sticker technology could help boost uptake until phones with reduces instances of fraud that are associated with traditional debit and credit net-
In parallel, as transactions take place
embedded NFC technology become widely available. works. Because no personal or bank account information is shared during the trans-
the Creditz system will record, store, mine, filter, and ana-
For instance, when G&D worked with O2 on an NFC trial in the action, Bling Nation’s technology drastically reduces the risk associated with device
lyze the buying patterns of the customers and merge this
U.K last year, 85% of participants said the make and model of the cloning or identity theft.
data with personal preferences and survey data of each in-
handset would influence their decision to adopt NFC services. The For community banks seeking to reduce operating expenses, while owning any
dividual consumer. The result is true secure consumer data
Convego Air Mobile sticker addresses this consumer decision in the local debit transactions between their own DDA customers and their merchant cus-
like never before—flexible and personalized customer rec-
short term, allowing the user to continue with their current handset. tomers, Bling Nation delivers a closed-loop payment network in which the bank acts
ognition with the power of market intelligence.
What are the implications for prepaid? A companion contactless as both the issuer of consumer payment mechanisms and the merchant acquirer. Al-
Creditz gives consumers digitalized cash they can redeem
sticker to a prepaid card account, or indeed the sticker acting as a lowing participating customers to make contactless payments that are processed
at any Creditz merchant; instant digital cash, instant ability
prepaid account in its own right presents all kinds of opportunities... entirely within the network reduces the number of participants in the payments value
to spend on any product and service the consumer wants.
chain and, as such, enables banks to claim a larger share of transaction values. L

54 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 55

 BEST BUSINESS PRACTICES

If “loyalty” is tied solely

to a branded credit card,
all those inactive card
holders are essentially
invisible to analysis.

But, what if the basis of your loyalty program and
your main source of customer data and insight is your
private label card? If this is the case, here’s a rather
critical question to consider: is your private label card
really as powerful a tool for cultivating customer loy-
alty—especially in today’s credit averse environment—
as it perhaps once was?
The fact is, a number of retail marketing leaders
have been determining that the answer is, “No…it is
not,” …and here are two major reasons why:
First, a large base of card-holders does not equate
to a high rate of active card use…and diminished card
use means diminished customer insight opportunity.
We all know why customers sign up for private label
cards. It’s a response to the opportunity to get a 10%
or 15% discount on everything purchased that day (or
as soon as the card is approved). The tactic definitely
works for stimulating applications. But what matters
much more is the percentage of card holders who con-
tinue to use the card. Few retailers claim that more
than 40% to 50% of their cards are actively used. What
that means is that if “loyalty” is tied solely to a branded
credit card, all those inactive card holders are essen-
tially invisible to analysis, development of insight into
So the question becomes even broader, e.g., what percentage of the
total customer base—and their associated shopping activity—is gen-
erally invisible? In cases where most loyalty cultivation efforts are
associated with a retailer’s credit card, the answer simply cannot be
known. Without insight, what is there to do but extend one discount
offer after another to the world in hopes of increasing store traffic?
Changing the Customer Conversation
A better way is to get promptly to work on the development of a
data base that is not dependent upon the use of any particular credit
card. Assuming your POS system can link a customer identity number
(email address, for instance, loyalty program member number or even
The goal is a stronger, more personalized
relationship—it’s the best hope for
success in a difficult retail environment.
phone number) to a specific transaction, you may begin the process
of gaining insight into all the important aspects of your customer’s
purchasing behavior…shopping frequency, locations visited, transac-
tion value, what items are purchased, and based on intense analysis
of customer preferences, what other products might be appropriately
suggested for trial. The goal is a stronger, more personalized relation-

The Private Label

their shopping behavior and, consequently, your abil- ship…it’s the best hope for success in a difficult retail environment.
ity to communicate with them in a targeted and cost Don’t have the resources “in house” to make the most of the data
effective manner. you are able to gather? Then move quickly to find an outside provider
of specialized expertise in data management, segmentation, analyt-

Credit Card Dilemma

Secondly, some percentage of the customer base—
even best customers for a given brand—have never
accepted the card and will not ever do so. They have
other cards they use—airline mileage cards, rebate
cards, etc., or have determined instead to utilize debit
by Jeffrey Harris, SHC Direct
cards or simply pay with cash.
ics campaign design and testing, and overall fact-based strategy de-
velopment. The right partner will contribute to your ongoing success
by helping you improve your communications ROI, increasing incre-
mental sales per customer and optimizing your investment (e.g., re-
ducing expense) in direct marketing. L

P erhaps there has never been a time when it has been more important than it is right now to know and
understand the shopping practices and preferences of your customers so that you may communicate with New Year Predictions:
them in ways that they will find meaningful and inviting…that is, other than by besieging them with emailed As customer relationship marketing experts and based on our discussions with many and diverse retailers …
2010
discount offers. •We anticipate consumer spending will be up by at least 2% during the course of 2010, as compared
But, what if the basis of your loyalty program and your main source of customer data and insight is your to 2009.
•We Look for a larger portion of marketing funds to be funneled away from traditional media in 2010 (as
private label card?
compared to 2009) in favor of mobile and electronic marketing.
•Significant progress by retailers will be made in 2010 in the effort to monetize the use of social media.

56 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 57

 BEST BUSINESS PRACTICES
Engagement and the ROI
of Results Measurement
by Todd Hanson, Catalyst Performance Group, Inc.
Engagement is good for business. In fact, a large percentage of businesses measure it and billions of
dollars are spent attempting to improve it through incentives, motivational meetings, rewards, recognition
and loyalty programs. Unfortunately, program results are rarely measured so there is little proof that the
investments pay off. This shocking reality is troublesome at best. At its worst, the inability to prove value
makes a company’s investment in engagement questionable.
The Definition of Engagement
Don Peppers, Founding Partner of Peppers & Rogers Group, has
worked to clear the confusion regarding the amorphous term “en-
gagement.” During a recent conversation, Don shared, “I think the
world is full of fuzzy acronyms and names for things. Engagement
was in danger of being one of those very fuzzy concepts.” In order
to help clarify the concept, Peppers blogged about the term and re-
ceived a couple dozen comments through the blog and on Twitter.
This helped him hone a definition.
“Engagement implies that somebody is involved. And more than
involved it means that you, in fact, take initiative, initiative that is
positive. We have a very simple definition of engagement,” Peppers
continued. “Engagement is most simply defined as positive and pro-
active involvement."
Engagement as a Driver
There is growing evidence that engaged employees and custom-
ers drive business results. In 2008, the Human Capital Institute and
IBM partnered on a study that looked at three-year financial track
records of 287 publicly traded companies. The findings included that
companies focused on measuring and addressing engagement and
aligning incentives, a powerful engagement tool, were more likely to
outperform others in their industries.
The Center for Talent Solutions, CTS, (formerly “Center for Tal-
ent Retention”) has been helping firms increase engagement levels of
employees and measuring individual performance for years. It has
found that what it calls “fully engaged” employees deliver, on aver-
age, 22% better performance than normally engaged employees.
In a case study undertaken by CTS, one company went
from a $112,000,000 loss to a $56,000,000 gain while ac-
tively pursuing specific programs designed to improve en-
gagement levels. This study and others like it are highlighted
58 Loyalty Management™ • LOYALTY360.ORG
in “The Engagement of Economics” whitepaper available at
www.ROIofEngagement.com.
The Results Measurement Gap
Return on investment, or ROI, has been the buzz in the incentive,
rewards, recognition, meetings and loyalty arena for 10-plus years.
Countless articles have been written about it, keynotes presented
and more. In fact, search “ROI” in Google and the result is a stun-
ning 99 million hits. Yet, rarely do companies measure results of
their engagement programs.
One example of the gap in results measurement was apparent
during a recent Human Capital Institute webinar on recognition,
attended by more than 300 participants. A poll revealed that ap-
proximately 50% of the respondents measured results by consider-
ing engagement scores, yet only 10% measured ROI of their engage-
ment programs.
So, why don’t companies measure ROI of engagement programs?
According to a study conducted by the Incentive Research Foun-
dation, IRF, the two most common reasons are that the company
views the program as a necessary expense and the program does
not have the visibility of senior level management.
When asked why more companies don’t measure results, Rodger
Stotz, Principal at Delta Qi Consulting and Chief Research Officer
at Incentive Research Foundation, said, “I think that many com-
panies rely on literature that illustrates higher engagement scores
correlating with improved financial results. In addition, most
companies don’t know how to do it. Unless the program is under
scrutiny, the need isn’t perceived as compelling enough.” When
questioned regarding the wisdom of such a mindset, Stotz added,
“When a program is under scrutiny, ROI is exactly what is needed
to defend or justify a program.”
The Silver Bullet
In the early 70’s, a young professional
named Jack Phillips completed his first impact
study for a top executive at his firm. It was to
be the first of many. As his skills developed, he ample, sometimes objectives are met or not
began to write and speak about the ROI meth-
odology he developed. 1983 marked the pub-
lishing of his first book on the subject and in
1993, The ROI Institute was launched. Today,
the methodology is used in more than 50 coun-
tries on thousands of studies each year.
The now trademarked ROI Methodology
has become a widely-accepted formula for
measuring results, up to and including return
on investment. When asked about
whether engagement programs
are typically measured, Phillips Engagement is most simply defined as positive
said “Not many. Most of these and proactive involvement.
programs are developed with a
logical, common sense approach,
–Don Peppers, Founding Partner, Peppers & Rogers
particularly a goal or objective is
achieved and the reward is matched to meet
that need. Unfortunately, there is not much
analysis around these programs, particularly
the type of analysis that we recommend.”
Phillip’s ROI Methodology is a systematic
approach that takes a potentially complicated
task and breaks it down into logical, sequential
steps. It generates six types of data and all six Methodology™
types are needed to fully understand the suc-
cess (or lack of success) of a program. In the
process of calculating ROI, Phillips insists on
using very conservative “Guiding Principles”
to assure that standards are met, especially
when converting data to money. This helps
assure credibility with discerning CFOs and
CEOs.
Another important part of the process is
isolating the effects of the program. For ex-
met for reasons other than the program itself.
There are other factors impacting results that
create static. The development and use of iso-
lation techniques has been a major contributor
to the overall acceptance of studies completed
using the ROI Methodology.
Lastly, the methodology insists that when
comparing financial benefits to a program’s
cost, the cost is to be “fully loaded.” As a result,
Group
all direct and indirect expenses are included
in these calculations.
The ROI of Results Measurement
Current events and a flagging global econ-
omy have only amplified the interest in and
need for results measurement. Although ROI
makes it doable and credible,
is it really worth the effort?
According to Phillips, “This process is need-
ed in this industry now. It can be implemented
with a minimum amount of resources and
cost. An organization must be proactive and
not wait for the request to prove value. Mea-
2010
2010 trends and resolution
•2010 will be a year of unprecedented
opportunity with both big losers and
big winners. Innovation will be the
differentiator.
•Increased use of holistic engagement
strategies that integrate loyalty,
reward, recognition, incentive,
meeting and event best practices
targeting employees, customers and
even vendors.
Win. Celebrate. Repeat. Lose. Learn.
Try again.
surement, routine accountability, and process
improvement should be a part of the culture.”
At its core, measuring results serves as a
process improvement tool. Data is collected,
insight is gained and the insight fuels continu-
ous improvement that is evidence-based. It
almost assures a strong ROI for results mea-
surement. For example, a pharmaceutical
company gained insight into the challenges
its sales force experienced with program
communication and registration. Not only
did the evaluation identify a previously un-
known problem, it provided valuable insight
that pointed to a solution. The net result was a
small investment improved par-
ticipant satisfaction, reduced
administrative errors and saved
countless hours of time with
sales professionals. That alone
provided a good ROI.
In addition to driving evi-
dence-based continuous improvement, results
measurement enables companies to defend
existing engagement initiatives and justify
future investments. Imagine the power asso-
ciated with being able to prove the value of an
investment with a credible evaluation.
Rodger Stotz said, “Despite the compel-
ling evidence that improving engagement
improves business results, we still should be
measuring ROI. And when we do, we should
share the results in order to learn from each
other.” L
Loyalty Management™ • WINTER 2010 59
 BEST BUSINESS PRACTICES

Once you’ve accepted that everything you do as a company Communication

contributes to the company’s success, it’s time to start active

Three Components
Have you ever gotten upset after receiving an email or
employee development. This can be broken down to three key voicemail only to realize later that you misunderstood what
components: the other person said? I’m a firm believer that 90% of business
problems can be solved with effective communication. Com-
Career Path

for a Successful
munication is not only telling clients, employees, and partners
Everyone in the organization should have a clear, career
exactly what you can do for them, but also listening effectively.
path defined. This doesn’t mean you tell your Call Center
A client is not often looking for just the least expensive option.
Manager to target and assign different people to go to Risk
Their needs will vary and it’s up to you to provide the best

Business Model
or Sales, accordingly. What this entails is sitting down with
solution for their specific needs. It is best to train employees
your management team and having a conversation about their
to first listen to what the client or partner is saying, and then
goals and interests within the company, and where they see
clarify any potential problems that are mentioned in the con-
themselves headed. The management team should then do the
versation. Suddenly, your sales person turns into a consultant,
by Eric Granado, CSH Consulting same with all employees. This is a great chance to get feedback
and is better adept to provide superior customer service, and
on what can be improved or enhanced. The goal is to increase
ultimately, is able to suggest the best possible solution.
employee loyalty because the focus is changed from this be-
To conclude, when you have a full staff of employees who
ing their job to establishing a career path. When the company
are professional and excited about their career path, experts
views employees as an asset, they will be more inclined to in-
in their field and extremely efficient communicators, you have
vest in the company.

Communication is not only telling clients,

employees, and partners exactly what you can
do for them, but also listening effectively.
Industry-Specific Training
The more your employees know about their industry, the
better able they are to perform in all aspects. For example, be-
ing thoroughly knowledgeable of the key indicators and value
added propositions that keep customers loyal to your brand
the recipe for a successful organization. This new business
model isn’t about simply increasing fees in the fine print or
giving top execs a haircut when profits are down. This model
is about understanding the needs of your clients and employ-
ees and creating solutions that work for everyone. Your clients

J
ust recently, I was having a conversation with a po-
tential client; the CEO was searching for an individual to
formulate a sales team. I started with the progression of usual
questions (type of professional background needed, years of
experience, preference to candidates from particular com-
panies, etc). The CEO stopped me and said “I’d like this ex-
ecutive to have payments experience, but beyond that, it’s all
about finding the right personality. Our company is here to
develop people and we need to find individuals that want to
excel. We look for energetic leaders and someone that can de-
velop others into leaders.”
What a refreshing take. This country was founded on the
premises that if you work hard, do your job well, then you will
succeed. In fact, part of the blame for the recent economic cri-
sis can be attributed to people that sat back, made investments
they knew were questionable and just watched the money fall
from the sky. As a result, many employees who worked hard
and did a great job were laid off. Trust and loyalty was bro-
ken—employees have lost faith and belief in their company.
Fewer organizations can assure employees will have a job to-
morrow and deals with clients are lost even more due to the
and making the distinction between frequency and loyalty will recognize that you understand their needs on more than
economic turbulence. Banks are receiving TARP funds, but
programs are significant. This can make a huge difference on just a transactional level. You will be able to build a firm foun-
not putting that money back into the economy through small
profits and garnering long term customer loyalty and exceed- dation within the business world.
business loans because they don’t trust the economy to hold up.
ing their expectations. In the payments groups I belong to, I see conversations
This pattern is not only exclusive to the current housing, in-
Encourage your employees to learn as much as they can about instituting regulations and mandatory certifications to
surance and auto crisis. Who in the payments industry hasn’t
about the gift and loyalty industry, in any venue possible. This increase the quality of business that’s being given. If we want
run into a small business owner and got to talking about trans-
doesn’t necessarily mean you’re taking employees away from the industry to change, if we want low turnover with maxi-
action processing, and the next thing you know the merchant
their daily duties to do a training class. You can distribute mum employee development, if we want merchant and cus-
is telling you a horror story of their last or current processor,
trade publications/magazines, encourage employees to sign tomer loyalty, the way to change the business world is to start
the fees they are paying, or the problems they’re having with
up for industry related webinars and join networks so that changing the way we do things now. Building up trust and
customer service? Because of unethical behavior or misrepre-
they are receiving real-time information on what’s going on in communication will ensure you have a steady client stream
sentation from others in the payments industry, we’re all pay-
the gift and loyalty space. for years to come. L
ing that price in bringing on merchants now.
It’s time for a new business model. A model that isn’t
about the bottom line, but a model that understands that
everything contributes to the bottom line.
2010 Loyalty & Engagement Resolutions 2010
When we encourage our employees to excel, we as a com-
pany are going to ultimately be stronger. If you behave with
complete integrity and openness with your clients, you can
1. Take as many risks as possible without letting myself say no; even if I think the entire
build that loyalty so that you are more than good on your word idea is completely, utterly crazy!
and that you are their consultant for the long term.
2. Read one personal development book each month.
3. Get out of the comfort zone and dare to be different; identify what’s missing & find
solutions.

60 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 61

 BEST BUSINESS PRACTICES
Ten Ideas to Build Morale in any Organization
by Billy Arcement, MEd, The Leadership Strategist
In today’s competitive business environment, an organization cannot afford to have employees give a half-hearted ef-
fort. Their contribution must be all that it can be in order to foster organizational prosperity. And, any businessperson
worth their salt knows that without growth, an organization will falter and die. What can managers and supervisors do
to foster growth and build employee contributions? Here are ten ideas that will achieve both goals—increased employee
contributions and organizational profits. They are not presented in any order of importance because all are important.
Why not use these ideas to evaluate what is going on in your organization?
1. Lead by Example
I’m probably from the old school but, as a manager, I al-
ways felt that I could not ask anyone working for me to do
something that I would not be willing to do. If employees feel
that the work they are assigned is a task they know you would
do, resistance is dramatically reduced. Secondly, walk your
talk. If you say everyone should come to work on time and you
never do, that message sends a mixed signal. Workers under-
stand that rank has its privileges, but they also understand
excess. There is a converse relationship on this point. That is,
the more excess they see their leaders practice, the greater
the morale gap. What is the privilege gap in your organization?
2. Grow Your Employees
The success of your organization will be in direct propor-
tion to how well you educate employees on their responsibili-
ties. In my observations on this practice, the worst violation
of this idea is in the ranks of management. We find a good
worker, make them a supervisor and then believe they are go-
ing to receive divine intervention to help with their decision
process. There must be constant support to help a new su-
pervisor or employee understand the rudiments of their job
responsibilities. Osmosis does not work in these cases. By
constantly evaluating individual progress and making the nec-
essary adjustments and providing more training for every em-
ployee serves as a great morale builder. Professional growth
is a stimulator. Do you have a growth plan for every employee
in your organization?
62 Loyalty Management™ • LOYALTY360.ORG
3. Compensate Fairly
While money may not always be the magic motivator, it certainly is judged as
a reward for our efforts. Compensation (pay and benefits) is best gauged by how
well an individual performs their job, the need for what they do, and the difficulty
of replacing them. Use these three points to measure the fitness of your entire
compensation package. Staying competitive builds longevity in the work force
and that lends itself to continual growth and ultimately survival in competitive
markets. Good employees deserve good compensation. Keeping everyone feel-
ing that they are being treated fairly in this arena is an important morale builder.
How does your compensation package compare to your competitors?
4. Involve Workers
Often times, the best ideas for improvement come from individuals doing the
work in areas that are being evaluated for improvement potential. Don’t ever
overlook the fertile ground collectively know as the brainpower of your employ-
ees. Managers who understand this rank among the best, and their departments
are among the most efficient and effective within the organization. Toyota is
famous for the thousands of suggestions provided by employees. Few can argue
that Toyota is not a successful enterprise. How many suggestions have you imple-
mented from your employees in the last year?
5. Stay Informed
A few years ago a popular term was “managing while walking around.”
Staying locked in your office is not the way to find out what is going
on in your department. Talk to employees. Watch as you walk where
your employees work. This can be a powerful learning tool. I recall a top
manager with whom I was working as a consultant who rarely left the
office to wander through the organization. The result was a minimum
degree of loyalty and commitment to carrying out work responsibili-
ties, and a lack of information regarding how things were affecting the
work force. And, this ultimately was a contributing factor in the loss of
the leadership role by this individual. On the other hand, Herb Kelleher,
former CEO of Southwest Airlines is a prime example of a leader who
always knew what was going on in his organization. Kelleher placed
employees high on his list of relationships to grow. He was beloved
and very effective leading his airline. Can anyone doubt the success
of Southwest? How informed are you about what is going on within the
walls of your department or company?
6. Make Work Interesting
Many miss the significance of this statement. Few things can mas-
sacre morale and motivation more than working at an uninteresting job.
Yes, most jobs are not fascinating all the time. But one way to assure
continual interest is to match job requirements with the skills and tal-
ents of workers. The more closely you can create congruency with work
responsibilities and employee skills, the greater the work satisfaction
will be. And, managers who do this have incredible results. Do you know
the skill and interest level of your employees and are you matching them
to their work requirements?
7. Bring a Cheerful Personality to Work
Admittedly, there are times when being cheerful is difficult. But, as
a leader, you have the obligation to set the attitude atmosphere. Your
demeanor is critical to the success of the organization. Be friendly,
genuinely caring for all employees under your charge, and approach
all with as positive an attitude as you can muster. Therefore, it’s very
important to make pessimism part of the past, not the current way you
run your business. Following the “Yellow brick road of positive thinking”
will produce results that might astound you. How is your attitude? Is it
worth catching?
8. Be Open to New Ideas
Never forget that others within your organization are capable of
making substantial contributions. Many times, all you have to do is ask
their opinion or seek their ideas. I talked about utilization of employee
suggestions in point four. Here, I want to take the idea a step further
by suggesting that leaders should always keep an open mind to ideas
given to them by employees. Keeping a closed mind and the mentality
that “this is the way we do it here” is a sure turnoff. You don’t have to
implement every idea provided but you’d better listen to those given
and implement the ones that can benefit employees and the organiza-
tion. Be willing to be a perpetual student who views employees as po-
tential teachers. Remember, it’s not always the boss who has the best
ideas. How many times in the last month have you opened your mind to
new ideas from those who work for you?
2010 predictions & resolutions 2010
Resolution
•Complete new book, Common Sense Leadership in
Uncommon Times by the end of 2010
Predictions
•It will take all of 2010 for the US Economy to recover
•The New Orleans Saints will win the Super Bowl
•Florida will repeat as BCS National Champion
•I will be one year older at this time next year
9. Make Integrity Your Guiding Star
If people are to begin to trust you, they must feel you possess integ-
rity as the cornerstone of all your actions. High standards of behavior
keep you on the high ground and present a consistent behavior pattern
employees can predict and trust. Workers may not always agree with
your decisions, but they will follow them with less resistance when they
know every decision is laced with integrity. Workers want a consistent
ethical performance, not a self-serving mindset. How would your work-
ers describe your level of integrity?
To help keep your workforce intact, create
a strong team spirit, develop a high level
of trust, and operate in an environment
that displays your loyalty to employees.
10. Build Loyalty and Teamwork
Again, trust enters the picture. Loyalty can only grow when workers
trust management. Workers accept leaders when they feel a reciproca-
tion of respect in the work place. Leaders who cannot be trusted cannot
build a loyal following. Likewise, a team spirit cannot grow if workers
sense a selfish attitude on the part of their management. Practicing all
the previous nine ideas I’ve shared will build a high functioning team.
The leader cannot do it all. He or she must have cooperation from those
they lead and that only comes when a team spirit is emphasized and
permeates the entire organization. Another item to consider today is
that young workers (Gen X) are not as loyal to the organization as pre-
vious worker generations and are much more mobile. Therefore, to help
keep your workforce intact, create a strong team spirit, develop a high
level of trust, and operate in an environment that displays your loyalty
to employees. How strong is your teambuilding process?
Well, how did you rate yourself on these ten points?
Assess as accurately as possible what is going on within your organi-
zation. Once you’ve reviewed these ten ideas, why not add a few ideas
of your own? Then, make sure that every day these practices become
the way your organization functions. Following these patterns of be-
havior and leadership will build strong morale within your work force
and make managing and leading a much easier task. There is no better
way to grow your business! L
Loyalty Management™ • WINTER 2010 63
 BEST BUSINESS PRACTICES

Trends, Implications TREND : Marketers are adopting social media by

creating Twitter accounts and Facebook fan pages,
Do not accept the Sunday Circular
mentality when advertising digitally.

and Solutions in
and then using those media for promotions such as
couponing or specials.
Again, this strategy is similar to the blast email strategy TREND : Those who are doing targeted direct mail
where every follower or fan receives the same promotion. are seeing year over year improvements in results

Engagement Marketing
Most marketers have no ability to measure the effectiveness of
promotions in Social Media other than by follower or fan count,
so they turn to Social Media Monitoring services.
IMPLICATION : This use of social media will have
the same effect as blast email.
by Bob Fetter, Pluris Marketing Consumers will not be excited about the promotion posted
every day at 11:30a.m. It becomes advertising akin to traditional
print advertising, only the medium is different.
because mail box clutter has been significantly
diminished.
In fact, many niche catalogers are seeing surprisingly high
performance results because the pendulum swung too far
the other way. Many direct marketers have reduced catalog
prospecting to zero as well, due to expense.
IMPLICATION : The implication of the reduction
in direct marketing as a viable prospecting tool is

O ver the past 12 months, we have seen a significant rise in interest surrounding “engagement” marketing,
in direct correlation with the rise in interest surrounding Social Media Marketing. In continuous discussion with
Also, most niche marketers do not generate sufficient
attention in social media to make effective use of a monitoring
service. A typical mid-market retailer might generate a few
marketers and consumers, I have noticed several trends that are worth discussing. hundred mentions per month across blogs, micro-blogs,
forums, comments, etc. These comments are typically positive
TREND : Most marketers are continuing to use a “blast” email strategy. or neutral in sentiment. Social Media Monitoring is better
Essentially, this involves doing the minimum amount of work to get the same email out on a daily or weekly basis to every registered email suited to large brands with avid audiences, such as Xbox, or
user in the database. With the recession and all of the economic issues surrounding the rising cost of direct mail, marketers have significantly brands that have a significant and ongoing dialogue with their
increased the use of the email channel. The marketers that I have spoken with do this email blasting with the knowledge that they would like consumer base, such as DirecTV or Comcast.
to do something else, but instead continue this strategy because email is “free” and doing something else will be too much work. These same
marketers readily admit that the effectiveness of those emails is continually decreasing, yet their email database is growing quickly enough to SOLUTION : Use social media best practices
offset declining performance per email. derived from direct mail.
If your company has dived into Social Media through a
IMPLICATION : We are killing email as a marketing channel. Twitter account and Facebook Fan Page and you are using those
Consumers rapidly disengage with our emails knowing that each email is not tailored for them, nor speaks directly with them. This is media for promotional activities, here are a few best practices
particularly worrisome when you consider that the increased use of Social Media and Mobile among consumers is causing a decrease in the to improve your social media effectiveness:
use of email as a communication mechanism. Friends are more likely to post status updates or use text messaging to alert each other to things 1. When you do a promotion using Social Media, create
they consider important. and store campaign metadata about that promotion as
you would in direct mail. Save the date, time, specific
promotion and targeted audience (your followers or fans).
The increased use of Social By doing this, you can then start to analyze the effects of
that promotion on store or web traffic.
Media and Mobile among 2. When you make an offer in Social Media, ensure that the
The times are certainly changing and changing
potentially quite large.
We have directional evidence that new consumers coming
from online sources have significantly less potential for
lifetime value than those who are traditionally sourced from
direct mail. This may just be a sign of the times as consumer
loyalty may be down when any offer made by a company can
be quickly price shopped in real time. Despite this, direct mail
still has a valuable place in the marketing mix.
SOLUTION : Cross-Channel Contact Strategies.
Develop a plan to vary contact cadence by consumer. To do
this effectively, you need to tightly integrate email promotion
history and web behavior into your analytic environment.
You need to know those who don’t open 99% of your emails
versus those who open 25%, and for those who clicked
through, where did they go and did they convert? What is the
right mix of direct mail, email and social? Techniques such
as simulation and scenario analyses are effective in guiding
contact strategy development. If you can track promotions
down to margin generated, you have a great start in designing
effective contact strategies.

consumers is causing a link in that offer actually goes to the offer. Sounds simple, rapidly. It is a fact that our consumers will always
but I am amazed at how many times the link is to the home be ahead of us, always trying new things to
decrease in the use of page of the specific branded web site and not the actual enhance their lives. Have you seen FourSquare?
offer, forcing me to either search for it or simply leave.
email as a communication 3. Ensure everything is trackable by source. For example,
We have a chance to engage them digitally, but we
must be smart about it and we must continually
mechanism. if you are going to advertise a mobile promotion on
Facebook, Twitter, your branded web site and in-store evolve. Investments in marketing technology must
promotions, ensure you use different sign-up messages be made with one requirement firmly in sight. We
SOLUTION : Analytically Driven Email. to track the source of the consumer. Similarly, if you don’t know what we need, but when we know we
We spent years building powerful models to direct mail performance. Now that we have the capabilities to inexpensively communicate in are doing a coupon-based promotion on Twitter and
an engaging way with our consumers, we throw those teachings away because email is “free.” By marrying off-the-shelf technologies, such as need it, we need it now. L
Facebook, use different offers or coupon codes to track
content management and an offer catalog, we can vary email content to engage our consumers based on their interests, channels, social site redemption by source.
membership, transactions with us, and any modeling element that we find value in using. Think of an email as a canvas upon which you can
drop highly customized content blocks to drive consumer engagement. Now, how do you get those emails opened? Vary the subject line by
developing and targeting personas that occur naturally within your consumer base. If you engage by interest, you have a real chance at standing
out in a crowded inbox.

64 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 65

 BEST BUSINESS PRACTICES

LM: So it’s really about an integrated approach these initiatives that make them so powerful. If force that is impacting both employee engage-
to customer experience management. Don’t you think of it in terms of a Venn diagram, with ment programs and customer loyalty programs.

Engaging Employees
companies find that overwhelming?
M: Absolutely. And that does discourage some
companies from getting started. I’ve spoken
with people who want to address customer ex-
your customer loyalty program in one circle and When I think about programs that I person-
your employee engagement initiative in another, ally enjoy being a member of—Starbucks, for in-
there will definitely be areas where organiza- stance—it’s because both the interactions with
tional efforts do not overlap. employees and the program itself reflect my un-

in the Road to perience but believe it is so complex that em- derstanding of that brand or the culture it repre-
B: However, where they do overlap, there’s a lot sents. That experience is about much more than
barking on a customer loyalty and employee
of power.

Customer Loyalty
initiative will not be effective because so many what I’m earning in the program. Conversely, I’m
different people “own it”. But, the key is getting M: Without a doubt. We think of both types of sure everyone can think of examples of loyalty
started somewhere and linking where it makes initiatives along 6 dimensions: strategy, com- programs that are just about the points with
sense. For example, we worked with a very large munication, measurement, management, tech- little to no real connection to a brand experi-
a discussion with Barry Kirk & Melissa Van Dyke, Maritz financial institution that had the goal of consoli- nology, and rewards. A simple way to start is ence. That can be a factor of program commu-
dating over 200 disparate employee reward and simply by considering each one of these dimen- nications, but I also tie it back to Melissa’s point
recognition programs into a single integrated sions for both efforts. For example: Have you about the impact of employee attitude.
reward platform. The driver was really to save considered customer appreciation as part of M: Right. If the way the employee introduces the
The following is a discussion with two experts who address people-centered solutions for different audiences— money and get better control over the resources your employee recognition strategy? Have you loyalty program to you, or interacts with you as
communicated all of the customer loyalty pro-
customers and employees. Barry Kirk focuses on strategy and design for customer loyalty and engagement invested. And they did that, saving an estimated you try to use the program, is inconsistent with
35% in administrative costs. But, the best thing gram parameters to your employees, educated your expectations of the brand...well, that’s put-
programs at Maritz and Melissa Van Dyke, also with Maritz, specializes in strategy and design for employee was how it impacted business results, includ- them on the benefits to the customers, and been ting a whole lot more work on the shoulders of
recognition and engagement. ing retention, employee satisfaction, and—this clear in the metrics you’re hoping to drive with the mechanics of your program.
is the key point—customer experience. In ana- your customer loyalty programs? Have you con-
B: That’s why whenever I’m asked to join a loyal-
lyzing both customer satisfaction data and re- sidered if there are technology and management
Loyalty Management (LM): People tend to think of LM: So that seems like a lot—launch a whole employee engagement strategy on top of ty program—even in places where I know I won’t
ward program statistics, we found that the bank overlaps in the resources you use for your cus-
customer loyalty as being all about the specific programs your customer loyalty program. ever join—I take a moment to ask the employee
branches with the most associates recognized tomer and employee programs? And have you
that companies run to engage customers, but there seems to explain it to me because I’m just curious to
B: Well, that’s only true if you assume we’re talking about two distinct initiatives here—a were also the branches with the highest custom- considered if consolidating your reward spend
to be overlap between customer loyalty and employee en- see how they’ll do. About 50% of the time, they
customer loyalty program and a completely separate employee engagement program. er satisfaction ratings. We don’t think that was on both fronts makes sense? Again, there will
gagement. Do you see them as linked? do great and I make a point of telling them so.
I think a more enlightened view is to see both as part of a single, holistic loyalty strat- just a coincidence. Any employee engagement always be work you’re doing for one group that
But as a loyalty marketer, it’s the other 50% of
Melissa Van Dyke: You just have to look at the numbers. egy, simply because the two pieces are so interdependent. How that sort of an approach initiative should be grounded in how to deliver doesn’t directly affect the other...but the closer
the time that keeps me awake at night.
We know from our own research that 43% of customers shows up will vary from organization to organization. In some cases you might be able greater value to customers. these programs are aligned, the more powerful
who defect from a brand do so because of service. And 77% to actually launch both as a single program on a shared platform. It’s more likely, though, they will be. M: Sounds like that other 50% needs some stra-
of those defections are because of employee attitude. The that the integration would come in the form of an overarching strategy that takes into LM: Are there natural leverage points between tegic employee engagement work! L
B: That’s why I’d take your Venn diagram, Melis-
link is indisputable. account the impact that each group has on the other. For example, do your employee customer loyalty and employee engagement?
sa, and add one more circle that says “Brand” or
performance metrics include the success of the loyalty program and do you provide the M: Definitely! In fact, it’s the synergies between “Culture” because so often that’s the unnamed
Barry Kirk: I completely agree. If any aspect of your cus-
right incentives to achieve those performance objectives? An example could be recog-
tomer experience involves interactions with your employ-
nizing employees for the number of customers they sign up for the loyalty program, or

43% of customers who defect from a brand do so

ees, then you can’t have customer loyalty without employee
engagement. Just recently I spent a day in a client’s retail
environment observing how the employee-customer ex-
perience played out. I was abso-
lutely impressed with the level of
You need to be at least as focused
care the employees were taking
with each customer. At one point I on engaging your employees as you
leaned over to the manager of that
are on retaining your customers.
store as he watched and quietly
said to him, “That is your loyalty program.” What I meant
was that the customer experience is foundational to build-
ing sustained and mutually beneficial relationships. Can you
build on that with great communications, point structures,
game dynamics and rewards? Without a doubt, but you
need that spark between customer and employee first.
M: Without it you are relying too heavily on loyalty program
mechanics to fill the void that should be your valued cus-
tomer experience. The real message here is that you need
to be at least as focused on engaging your employees as you
are on retaining your customers.
their effectiveness in encouraging the customers they serve to use their program card
with each purchase.
M: Another great example of that is a recent project because of service. And 77% of those defections
we did with a charitable organization to encourage
employees in chain restaurants to solicit customer
donations. You’ve seen that—where you make a small
are because of employee attitude.
donation and get to sign your name on a card for all to
see. The employee program was simple and included
targeted education, communication and rewards. Although we didn’t control any other brand
part of the employee or customer experience, the program helped increase donations at
participating stores 43% over the prior year. Engaging the employees made a significant customer
difference. experience
B: There is also an additional piece to this puzzle that I think is often—even usually—
overlooked. That’s the best practice of encouraging your employees to actually become
members of the customer loyalty program themselves. The rationale for that should be
obvious—that your employees get first hand experience of the benefits of the program so
they can better sell it to customers. It’s really difficult for me to recommend the chicken customer employee
versus the veal if I’ve never tried either—I can read you what it says in the menu, but not loyalty engagement
much else. The same is true for your loyalty program—an associate with direct experi- programs initiatives
ence earning and redeeming is in a far better position to be an evangelist than one who
is simply reciting a script.

66 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 67

 BEST BUSINESS PRACTICES

B uilding a program is not an instant guarantee that the pro-

gram will be successful. In far too many cases, companies treat
this as a cost of doing business rather than building a sustainable
Having your employees completely engaged so that they become
ambassadors of the program, ambassadors of the corporate
brand and overall company ambassadors. These are the people
program that has a positive effect on the bottom line. They build a that will have the most lasting affect on your customer base and
program, put some rules around it, even establish some branding their loyalty. People do want to earn their program rewards, but
and take it to market. Far too often these programs underacheive. will quickly become disengaged with a program if the service lev-
Not only is the value proposition not clear to the customer, but little els aren’t there.
if any effort is put into establishing a corporate loyalty culture from
the senior executive level down to the customer front facing em- The message though, needs to resonate down from the top of the
ployee base. organization and become part of the corporate culture. The most
senior level of executives needs to believe in not only keeping their
There is enough research out there to support that engaged em- employees well trained and engaged, but also be able to bring the
ployees have a very positive effect on corporate revenue growth. message down to the employee base. They need to establish a
In a case study designed to measure the effect of employee satis- strong link between employees and brand. Employees need to
faction on customer loyalty, Sears Roebuck found that for believe in brand attributes and understand the importance of the
every 5 percent improvement in employee satisfac- allure of their brand in the buying decision process. Employees
tion there was a 1.3% increase in customer loyalty need to understand how to treat customers as individuals and
which produced a 0.5% increase in revenue growth. make each and every customer a brand advocate.
This amounted to $200 million
dollars. When building customer loyalty, you need A company that does this
extremely well is one of
Engaged and happy employ- to make sure that you have loyal, well Canada’s leading retailer’s,
ees, especially those who have
front facing positions with
treated, well trained and highly engaged Harry Rosen. Harry was in-
terviewed a couple of years
customers are critical to the employees focused on making the buying back by Profit Magazine in

Pushing Loyalty:
overall success of establishing
the loyalty connection. These
experience one that customers will come their “Ask the Legends” se-
ries and had this to say:
people are critical to making back for over and over again. “From the very first day, it
the experience at point of con- has been our intention to be-

Connecting Employee
tact a good one for the customer. Loyalty will be lost if the in store friend the customer. We try to enter into some sort of personal re-
experience is a bad one. People want to be “Wowed.” In a recent lationship with them, where we learn something about them and
study by Verde Group, the Retail Council of Canada and the Jay always use that information to help sell them the right things. As

Engagement to Customer H. Baker Retail Initiative at the Wharton School, it was found that
“Wow Factors” do have a huge impact on loyalty. They found that
we expanded, I would go from store to store and work on the sell-
ing floor. It meant so much to the staff to see that the principles

Loyalty customers who have enjoyed “Wow Experiences” are over 75%
more loyal to the stores than those who have not enjoyed a great
shopping experience. Of course “Wow” shopping moments aren’t
by Michael Konikoff, Fairlane Group just from engaged sales people, but they do play an integral role.
we espoused in training were in fact the practices of senior man-
agement. That’s the glue: management walking the talk. We’ve
also been able to select the kind of employee who enjoys living by
this idea that there’s nothing more important than the customer.”

“If you build it they will come.”
A great line from a great movie.
Guess what? He built it and they came. It wasn’t easy though;
he needed to clear the field, build a back stop, put up lighting,
put up stands. Basically, build it in a way that would attract
them to come. Once they realized that he had built this gem of a
baseball diamond and it had everything they needed, they came
again and again.
Too bad the same doesn’t hold true for loyalty programs.
By the way, Harry Rosen pays his staff based on customer reten-
Aiming for in store excellence from your employees is a critical suc-
tion as opposed to sales commission!
cess factor for any loyalty program. While customers want great
in store experiences, they also need staff that are fully trained
When building customer loyalty, you need to make sure that you
on driving the loyalty program internally. A great example of this
have loyal, well treated, well trained and highly engaged employ-
would be Shoppers Drug Mart Optimum program. No transaction
ees focused on making the buying experience one that custom-
is completed without the cashier asking if the customer is part of
ers will come back for over and over again. This linkage will most
the program. If they aren’t, customers are asked if they would like
certainly drive bottom line results and overall loyalty. And like the
to join the program. In addition to this, all staff are encouraged to be
movie they will come back again and again. L
members of the program and understand the value proposition and
program rules. This is what I refer to as “Pushing Loyalty.”

Economic conditions will continue to improve in 2010 which we predict will

thoughts
for 2010
bring an increase in overall budgets for loyalty. The other change we
2010 expect to see is that people will start changing their redemption patterns.
Instead of using their loyalty points for products they need, they are going to
start using their points for products they want.

68 Loyalty Management™ • LOYALTY360.ORG Loyalty Management™ • WINTER 2010 69

 NE
Train for Tough Times

10 Ma
BEST BUSINESS PRACTICES

W
0% ter
extended loyalty program profile

AIR MILES™ and MY PLANET ™

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interested in speaking or exhibiting?
contact Erin Raese:
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